Anil-Ambani led Reliance Communications (RCom) staved off insolvency fears as the Department of Telecommunication (DoT) on Friday told the Supreme Court that it was ready to provide the company the No Objection Certificate (NOC) for spectrum and asset sale to Reliance Jio Infocomm.
The said NOC, the DoT told the court, would be issued to RCom in two days provided its arm Reliance Realty did not sell the “preference shares that are reflected in the financial statement of 2017-2018”. On its part, RCom assured the court that it would not do so without prior permission from the department.
The clearance by the DoT, which would be given by Monday, is a huge relief for RCom which was staring at insolvency.
The company still has to make a payment of Rs 5.5 billion to Ericsson by Saturday. On Friday, though RCom again sought court’s permission to extend the December 15 deadline by 2 weeks, the court refused to hear the plea and orally observed that it should pay Ericsson from its own pockets.
RCom has to pay Rs 5.5 billion to Ericsson as a part of an agreement it had reached with the latter in the National Company Law Appellate Tribunal (NCLAT). While asking RCom to clear the dues, the NCLAT had said Ericsson could revive the insolvency petition against the company if it failed to pay within the stipulated deadline.
RCom had then approached the apex court seeking an extension of the deadline, which was initially September 30 and later moved to December 15. The top court, however, had then made it clear that there would be no extensions beyond that. It had also directed RCom to pay Ericsson interest at the rate of 12 per cent per annum for missing the September 30 deadline.
Apart from Ericsson, the Anil Ambani-led company has to clear debt of nearly 39 financial lenders and operational creditors.
As part of its debt reduction efforts, RCom had, in December 2017, signed Rs 250-billion deal with elder brother Mukesh Ambani’s Reliance Jio Infocomm (Jio). 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.