Supreme Court orders status quo for RCom asset sale to Reliance Jio

The Supreme Court on Thursday ordered status quo to be maintained in the sale of Anil Ambani-led Reliance Communications’ airwaves, fibre and towers to Relaince Jio for Rs240 billion.
 
A consortium of lenders, led by State Bank of India (SBI), had challenged the stay order of the National Company Law Tribunal (NCLT) on the proposed sale. The Supreme Court refused to raise the stay order or revoke the Bombay High Court March 8 order, which had dismissed an RCom plea against it.
 
The NCLT had been moved by Swedish telecommunication equipment maker Ericsson.
 
 The SC Bench of Justice Adarsh Goel said a full hearing of the case would be held on April 5. RCom owes Rs450 billion to public sector banks and exited a strategic debt restructuring plan in December last year after it assured them that it would repay debt by selling its assets to Jio.
 
The sale is important for RCom to repay debt by March. Else, it could be sent to the NCLT under the Insolvency and Bankruptcy Code. Banks would also have to make additional provision for its loans if RCom failed to meet its provisions.
 
Additional Solicitor General Tushar Mehta, appearing for the banks, said they were secured lenders and their claims should take precedence over that of an unsecured lender such as Ericsson. He also informed the Bench that the value of the assets was depreciating.
 
Senior advocate Ranjit Kumar, appearing for Ericsson, said if the stay order was vacated, the company would remain remedy-less and may not get its dues back. RCom owes it Rs10.12 billion equipment supplied to its now closed wireless operations.
 
Offshore investors led by HSBC Daisy Investments (Mauritius) are also fighting to prevent the sale of tower assets held by a RCom unit.
 
If Ericsson’s petition is admitted by the NCLT then the company’s board will be suspended and an insolvency professional appointed to oversee the company’s sale or liquidation. 
 
China Development Bank (CDB), RCom’s largest creditor, had filed a similar petition last year but withdrew it after RCom announced the proposed deal with Jio and Anil Ambani flew to China to apprise CDB’s management about the transaction.
 
RCom is in talks to sell its business communications assets at a valuation of nearly $1.2 billion, with five bidders including a New York-based private equity firm in the race, Financial Times reported on Thursday. RCom’s enterprise business includes international submarine cable network, fixed-line telecom network and data centres in India.
 
An RCom spokesperson, however, said the news was “speculation”.