The stalemate over Reliance Communications’ pending dues to Ericsson India, and the subsequent insolvency fear continued on Wednesday as the National Company Law Appellate Tribunal (NCLAT) adjourned hearing in the matter to January 22 in view of the case pending before Supreme Court.
On December 14, the Department of Telecommunications (DoT) had told the top court that it would issue a No Objection Certificate (NOC) to RCom for the spectrum sale within 2 days provided the company’s arm Reliance Realty did not sell the “preference shares that are reflected in the financial statement of 2017-2018”. On its part, RCom had assured the court that it would not do so without prior permission from the department.
The government’s nod for spectrum sale, however, got stuck in a limbo after Jio wrote a letter to DoT on Friday seeking clarifications and assurances that it would not be held liable for RCom’s dues related to airwaves once its deal with RCom was completed. The condition forced DoT to hold its NOC as the rules state that the government can ask either of the operators to clear the dues before it gives the nod.
RCom representatives, meanwhile, have approached DoT to work out a solution and were said to be in closed door meetings with the government to reach an agreement, sources close the development said. The company is hopeful of reaching an understanding with the government over the pending NOC by Wednesday evening, the sources said.
RCom meanwhile also failed to pay Rs 5.5 billion due to Ericsson by December 15. The two companies had reached an agreement in NCLAT over the amount. While asking RCom to clear the dues, 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.
On Wednesday, RCom told the NCLAT that it would make the payment after it received a NOC from DoT for its spectrum sale to Reliance Jio Infocomm.
The NCLAT on Wednesday also asked RCom’s arm Reliance Infratel to file an affidavit, within three weeks, detailing the payments that were due to HSBC Daisy Investments Mauritius. The company has to make a payment of Rs 2.3 billion to RCom minority shareholders of Reliance Infratel, including HSBC Daisy Investments.
Minority investors including HSBC Daisy had earlier this year moved NCLAT opposing the sale of RCom’s tower assets, held by Reliance Infratel, alleging “oppression of minority shareholder”. These investors, who together hold nearly 4%, had then opposed the asset sale alleging that the company had not sought their approval for the sale, which amounted to oppression.
HSBC Daisy and RCom had, however, reached an agreement in June, which paved the way for the tower asset sale. 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.