February 3, 2019:

The lenders’ consortium includes State Bank of India & China Development Bank. Others include Union Bank, Canara Bank, IDBI Bank, Standard Chartered Bank & HSBC.

Reliance Communications will shortly move the insolvency tribunal seeking bankruptcy protection as the Anil Ambani-owned company seeks to sell assets, repay lenders & pare its 42,000-crore debt within 270 days, having been unable to do so in the past year & half.

“The board noted that, despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset-monetisation plans, & the overall debt-resolution process is yet to make any headway,” the company said in a statement on Friday.

It added that RComNSE -34.91 % has been unable to complete its 18,000 crore asset-sale plan due to various legal hurdles & the lack of consensus among more than 40 lenders, Indian & foreign, despite more than 45 meetings. The lenders’ consortium includes State Bank of India & China Development Bank. Others include Union Bank, Canara Bank, IDBI Bank, Standard Chartered Bank & HSBC.

RCom & its two units — Reliance Telecom Ltd (RTL) & Reliance Infratel Ltd — will soon take steps to seek fast-track resolution through the National Company Law Tribunal (NCLT), Mumbai, the company said.

“The board believes this course of action will be in the best interests of all stakeholders, ensuring comprehensive debt resolution in a final, transparent & time-bound manner within the prescribed 270 days,” the company said.

RCom’s move will mean its agreements to sell 122.4 MHz of spectrum & 43,000 telecom towers to Reliance Jio & some real estate to Canada’s Brookfield get cancelled. However, it has already completed the sale of nodes & fibre for Rs5,000 crore.

Under the NCLT process, interim resolution professionals (IRPs) will be nominated by the tribunal to run the company & its units & oversee a bidding process to sell the remaining assets within a maximum 270 days.

Jio could then bid for those same assets, with a person familiar with the matter saying the Mukesh Ambani-owned telco may “end up paying less for the same assets under the insolvency process”. Jio didn’t immediately respond to ET’s queries.

RCom shares ended at Rs11.60 on the BSE on Friday, down 1.3%.

RCOM’S TROUBLES

In May 2018, the NCLT had admitted three insolvency petitions against RCom filed by Swedish gear maker Ericsson, which was seeking a payment of over Rs1,100 crore in dues. The insolvency tribunal named three separate IRPs from RBSA Restructuring Advisors LLP to run RCom & its two units, RTL a& d Reliance Infratel, as part of the bankruptcy proceedings.

But the telco — which was forced to shut its wireless operations under financial pressure late 2017 — moved the National Company Law Appellate Tribunal (NCLAT) & averted bankruptcy proceedings by citing its deals with Jio & Brookfield, & agreed to pay Ericsson Rs550 crore as a settlement.

But RCom has still not paid Ericsson, triggering contempt of court petitions in the Supreme Court against the telco’s chairman Anil Ambani, with the spectrum sale to Jio having been rejected by the Department of Telecommunications (DoT). The government said the deal to trade airwaves does not conform to its guidelines after Jio wrote to DoT refusing to be held liable for any of RCom’s past dues.

“Jio’s letter to DoT was practically the last nail in the coffin… This (moving NCLT) will at least ensure a debt resolution within a specific time frame & some sort of certainty for lenders,” said a person familiar with the matter.

The apex court had backed DoT’s contention & had asked RCom & Jio to decide on the matter. But Jio has stuck to its stance, following which DoT has also repeatedly refused to clear the deal, leading to a stalemate.

Besides Ericsson, RCom also needs to pay Rs232 crore to the minority shareholders of Reliance Infratel, including HSBC Daisy Investments. This matter is being separately pursued in the NCLAT.

Jio & RCom recently extended the tenure of their trading pact by another six months to June end, but with Friday’s statement, that deal would appear to be off the table.

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