The National Company Law Appellate Tribunal (NCLAT) will hear the interim prayer of Reliance Communications (RCom) on Wednesday after the bench headed by chairman Justice S J Mukhopadhaya suggested that the parties settle the matter themselves.
Appearing for RCom, senior advocate Kapil Sibal told New-Delhi based NCLAT that the stressed telecom company offered its operational creditor Ericsson an up-front sum of Rs 5 billion to clear all dues.
The Swedish telecommunications equipment manufacturer and service provider signed a sever-year deal in 2014 with RCom and its subsidiaries for maintaining, upgrading and developing the latter’s telecommunications infrastructure.
Ericsson counsel told the appellate tribunal that its dues stood at Rs 9.78 billion for services rendered to RCom. It said the figure increased to Rs 16 billion given that the Anil Ambani-led telecommunication company delayed honouring payments to Ericsson. The bench encouraged the parties to reach an amicable settlement saying, “You know the fate of operational creditors (in corporate resolution process). If you want, we would give you time for settlement.”
NCLAT will hear RCom’s plea seeking a stay on the May 15 order of the Mumbai bench of the National Company Law Tribunal (NCLT), which directed that the company be admitted for insolvency proceedings under the Insolvency and Bankruptcy Code (IBC). Further, resolution professionals have already been appointed by the NCLT in Mumbai to take over the three companies.
Ericsson had filed a petition with the NCLT in Mumbai last September, seeking liquidation of RCom in order to recover Rs 11.5 billion. As of December 2017, RCom owed its lenders around Rs 460 billion and had proposed a debt restructuring programme with its lenders. The scheme entails an asset monetisation scheme wherein assets like mobile towers, spectrum and optical fibre network of the company would be sold to Reliance Jio Infocomm (Jio) for Rs 170 billion. But given the admittance of all three companies to the IBC, this debt restructring programme has come to a halt, increasing the risk liquidation of the firm.
However, if NCLAT stays the Mumbai bench’s order and if the settlement offer proposed by RCom is accepted by Ericsson, at a near-70 per cent haircut, then the debt restructuring and asset sale to Jio will continue.
RCom entered into a standstill arrangement with its lenders which ensured that the company need not pay the interest or the principal on its outstanding debt till December 2018, given the plans to raise funds by selling assets.
Minority shareholders dispute
In a stock exchange filing on Tuesday, RCom stated that Reliance Infratel had informed NCLAT stating that “an amicable settlement has been arrived at between it and minority investors holding 4.26 per cent equity in the company, and consent terms will be filed shortly.” Led by HSBC Daisy Invesments, RCom’s miniority shareholders filed a petition with the NCLT in Mumbai opposing the sale of the company’s firbre and tower network to Jio.
“This settlement would pave the way for vacation of the stay granted by the NCLT and will enable RCom to proceed with the asset monetisation of Rs 80 billion when the company exits the IBC process,” the filing states. NCLAT will hear the petition looking for a stay on the Mumbai bench order admitting RCom and its subsidiaries under the corporate insolvency resolution process on Wednesday.