Billionaire Anil Ambani’s Reliance Communications (RCom) told Supreme Court on Monday that its asset sale to Reliance Jio Infocomm may not go through if approvals aren’t in place by mid-December, putting at risk planned debt repayments by the distressed company.
The government, however, reiterated its stand in the Supreme Court that it could not grant an approval to RCom for spectrum sale to Jio until a bank guarantee of Rs 29.4 billion was given to it by either company toward spectrum usage charges.
RCom, on the other hand, said that it was not in a position to furnish the said bank guarantee and that it had already given land worth nearly Rs 14 billion as security for the government's dues.
But the government refused to use the land given to it as security by RCom and said it would prefer a bank guarantee.
“If the spectrum sale is not approved, banks will also not get anything,” Kapil Sibal, a lawyer representing RCom, said in court said on Monday.
The top court was hearing a plea moved by the department of telecommunications (DoT) on Monday. In its petition, DoT told the Supreme Court that the Centre was looking for some kind of security from the company before it could allow the spectrum sale.
The two-judge bench headed by Justice A K Sikri will next hear the case on Tuesday.
The Telecom Disputes and Settlement Appellate Tribunal had on October 1 allowed debt-ridden RCom to sell its spectrum to Jio.
The approval was granted by the tribunal on a petition moved by RCom, which had challenged the bank guarantee demand by the telecom department. Monday's appeal by the central government was against the approval granted to RCom by the Telecom Disputes and Settlement Appellate Tribunal.
As part of debt reductions efforts, Anil Ambani-led RCom had in December 2017 signed a Rs 250-billion deal with elder brother Mukesh Ambani's Jio. The brothers have since wrapped up smaller deals, including one involving transmission nodes, but RCom has been awaiting clearance from the department of telecom due to its pending dues.
The deal included sale of assets mortgaged with different banks to avoid insolvency proceedings. The company expects to raise Rs 180 billion from sales of its wireless assets to Jio and real estate assets to Canada’s Brookfield, and pare some of its Rs 460-billion debt.
The company’s shares have dropped 64 per cent so far this year. The company had about $7 billion in debt outstanding as of March 2018.