Anil Ambani vows to reduce extra debt after paying $5 billion

Bloomberg

Embattled Indian tycoon Anil Ambani pledged to reduce debt at his infrastructure-to-finance conglomerate to a “bare” minimum, seeking to bolster investor confidence in an empire that’s grappling with high leverage and delayed asset sales.
The Reliance Anil Dhirubhai Ambani Group has repaid 350 billion rupees ($5 billion) in the past 14 months, an amount entirely raised through disposal of assets, Ambani, 60, told reporters in a rare conference call on Tuesday without elaborating.
His businesses have been straining since a government crackdown on bad loans, while his telecommunications unit is facing insolvency.
“Reliance Group is committed to meeting all future debt obligations” and becoming “capital light, with bare minimal debt,” Ambani said.
The younger brother of Asia’s richest man — after carving out parts of an empire his father left behind more than a decade ago as part of a settlement in a succession feud — has been paring his businesses after years of debt-fuelled expansion. Last month, his group announced the disposal of a radio station and the mutual fund business to repay creditors. Reliance Capital Ltd was also in talks to sell its general insurance unit, people familiar with the matter said.
In the conference call, Ambani didn’t directly address recent allegations of fund diversion against his non-banking financing arm.
A report by Risk Event-Driven and Distressed Intelligence said it found “some unusual lending arrangements within the Reliance Capital Group” that employed “box companies” to allow Ambani’s group firms to receive funds from the financier, without triggering regulatory disclosures.
The “alarming” rise in such loans could snowball into another liquidity crisis in the struggling shadow banking sector, the report said.
“Unwarranted rumour mongering, speculation and bear hammering of all Reliance Group companies shares over the last few weeks, has caused grave damage to all our stakeholders,” Ambani said.
An email over the weekend seeking comments from Reliance Capital spokesman on the REDD report wasn’t answered.