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Billionaire Anil Ambani’s plan to dig his telecom unit out of a debt hole, via an asset sale to his brother’s firm, is facing a fresh hurdle that threatens to delay the deal past a March deadline.
A local arbitration tribunal on March 5 barred Reliance Communications, or RCom, from selling assets as the court examines a dispute over unpaid dues with the Indian unit of Ericsson AB.
The loss-making operator is also expected on Tuesday to seek the consent of its bondholders in London on an amended payback schedule.
RCom’s ability to navigate this twin test — persuading thecourt and bondholders — will help decide the fate of a bailout deal struck in December to sell airwaves, towers and fiber assets to Mukesh Ambani’s Reliance Jio Infocomm Ltd. The transaction, which RCom expected to close by March 2018, had helped stave off insolvency.
The company is “restrained from transferring, alienating, encumbrance or disposing off any of its assets without specific permission/leave of the Arbitration Tribunal,” the court said in its interim order, clarifying that the final order may lift these restrictions. The next hearing is set for June 9.
RCom can appeal the interim order before a high court and then India’s Supreme Court. An email sent to an RCom spokesman went unanswered.
RCom announced the sale of its key wireless assets to Reliance Jio on December 28. The deal was estimated at the time to have a fair value of between ~240 billion and ~290 billion by Jefferies Group LLC analysts.