Debt-laden Reliance Communications (RCom) and Reliance Jio Infocomm (RJio), a wholly-owned subsidiary of Reliance Industries (RIL), have decided to mutually terminate an asset-sale agreement.
This comes even as Mukesh Ambani stepped in to save his younger brother Anil from going to jail by coughing up the money to repay Swedish equipment major Ericsson. RCom on Monday paid ₹458.77 crore to Ericsson, avoiding a potential three-month jail term for its Chairman Anil Ambani.
The asset sale agreements, signed on December 28, 2017 and August 11, 2018, were supposed to reduce RCom’s debt but regulatory and legal hurdles delayed the completion of the deal.
The transactions were called off due to non-receipt of consent and no-objection certificates from RCom’s foreign and Indian lenders, who number over 40. This was despite over 45 meetings and the passage of over 15 months, RCom said in a regulatory filing.
Further, the non-receipt of requisite permissions and approvals from the Department of Telecommunications (DoT), and the decision by the RCom board at its meeting on February 1 to seek fast-track resolution of its overall debt through the National Company Law Tribunal (NCLT) were among the other reasons.
The applications filed before the National Company Law Appellate Tribunal (NCLAT) on February 4 for withdrawal of appeals against the admission of RCom, Reliance Telecommunication and Reliance Infratel to the NCLT debt resolution process, and a February 4 NCLAT order on restraining the sale, also hampered the process.
Lenders, in their NCLAT statements on March 15, also said it was not possible for them to sell the specified assets, and that the NCLT process for debt resolution should be reinstated.
However, RCom said it was committed to a comprehensive resolution of its overall debt through the NCLT process. The next hearing at the NCLAT is on April 8.
On December 28, 2017, RJio had emerged as the white knight willing to acquire the wireless assets of debt-laden RCom.
This was among a series of deals between brothers Mukesh and Anil, who had parted ways in 2005, after carving the Reliance empire into two.
RJio emerged as the successful bidder in a two-stage bidding process, with the company announcing plans to acquire RCom’s over-43,000 towers, 1.78-lakh route km of optical fibre cable network, 122.4 MHz of spectrum in the 800, 900, 1800 and 2100 MHz bands, and 248 Media Convergence Nodes.
These assets were expected to contribute significantly to the roll-out of RJio’s wireless, fiber-to-home and enterprise services.
RCom shares fell 9.30 percent to Rs. 4 on a strong BSE, which ended up 0.19 percent on Monday.―The Hindu Business Line