Reliance Jio Infocomm’s (RJio’s) 2020 deal to acquire Reliance Infratel (RITL), the tower arm of Reliance Communications (RCom), is finally moving towards closure with the lenders agreeing to provide details of the forensic audit that tagged the latter’s account as ‘fraud’.
“The lenders have agreed to hand over the details of the forensic audit (to RJio) this week, and once the data is scrutinised and if there are no further discrepancies, the acquisition would be closed immediately. We are expecting to close the deal within 10-15 days of getting the audit,” a source close to the development said.
In May 2018, RCom’s Indian lenders referred the firm and its subsidiaries – RITL and Reliance Telecom – to the National Company Law Tribunal (NCLT), after the firm, then controlled by Anil Ambani, failed to pay dues worth Rs 46,000 crore.
“Under the bankruptcy code, a fraud tag would not be applicable to the new owners of the company. However, RJio wants to make sure that everything is in order before it closes the deal,” a banker said.
Earlier this month, four financial institutions, including two Chinese banks, wrote to finance minister Nirmala Sitharaman and the Insolvency and Bankruptcy Board of India seeking their intervention to speed up RITL’s resolution process. The signatories – China Development Bank, Export Import Bank of China, Shubh Holdings Pte and SC Lowy Asset Management – accused Mukesh Ambani-controlled RJio of not implementing the resolution plan.
RITL owes these financial institutions a total of Rs 13,483 crore out of its total debt of Rs 41,055 crore.
In March 2020, Reliance Projects and Properties Management Services, an RJio subsidiary, emerged as the winner for RITL and UV Asset Reconstruction Company for RCom.
However, the process came to a halt in November 2020, after State Bank of India, Union Bank of India and Indian Overseas Bank tagged RITL as a “fraud account” following a forensic audit.
RJio, which received the NCLT approval for the deal in December 2020, insisted it requires the details of the fraud tag and its removal prior to closing the deal. However, the lenders were of the opinion that tag would be removed after RJio completes the acquisition.
Later in May 2021, Reliance Projects moved NCLT asking it to direct the lenders to share the audit report, stating terming the accounts as fraudulent was not disclosed before NCLT.
The financial institutions also alleged that Reliance Projects enjoys the complete use of the RITL towers at a significantly discounted price, which is resulting in the committee of creditors incurring losses of Rs 30-40 crore per month for maintenance. Financial Express