16
MUMBAI: Shares in Reliance Communications fell sharply by over 50 per cent on Monday as the company said it will move the insolvency tribunal for bankruptcy protection.
The move, the telco said, will help it sell assets in a time-bound manner, having failed to do so in the past 18 months.
The RCom stock was down by more than 50 per cent at one point, trading at Rs 5.30 on the NSE today.
Following RCom's statement on Friday, Ericsson now is set to file an application in the Supreme Court, pleading that Reliance Communications Chairman Anil Ambani's all personal assets be seized for breaching the top court’s order to repay the Swedish telecom equipment maker its dues.
Ericsson has chalked out its options to ensure it gets its settlement amount of Rs 550 crore, people aware of the developments said.
“Petitioning to freeze personal assets of Anil Ambani is one of them,” one of them told ET.
Ericsson did not respond to ET's queries at the time of filing the report.
RCom had on Friday said it plans to move the National Company Law Tribunal (NCLT) for bankruptcy protection, conceding that it had failed to complete its spectrum sale to Jio due to the telecom department's refusal to clear it and the matter being dragged to various courts.
The company expects this move to help it sell assets, repay lenders and pare its Rs 42,000 crore debt within 270 days, having been unable to do so in the past year and a half.
The telecom operator on Sunday said its asset monetisation plan is still on, indicating its deal with Reliance Jio Infocomm (Jio) stands.
It also said failure to get no objection certificate from lenders forced its hand.
Under NCLT, a resolution can be reached with NoC of 66 per cent of the lenders.
“RCom’s management will propose a similar debt resolution plan in the… NCLT process, as was earlier being pursued outside NCLT,” the telco said in its statement.
RCom said this includes sale of spectrum and infrastructure assets, monetisation of other businesses like Global Cloud Exchange (GCX), India Data Centres (IDC) and Indian enterprise business, development of 30 million square feet at the Dhirubhai Ambani Knowledge City complex, and sale of real estate assets.
The telco had charted an asset monetisation plan of selling its wireless assets to Jio and some land parcels to Canadian firm Brookfield for Rs 18,000 crore, but a large part of the deal is stuck because of a tussle over NoC from the telecom department over spectrum related dues.
“Our deal with Jio stands and we should be able to complete it within the latest June end deadline,” a senior RCom official said.
He added that the telco owes its lenders Rs 38,000 crore, of which Rs 19,800 crore belong to Indian lenders and Rs 18,200 crore to foreign ones.
DoT has refused to clear the RCom-Jio spectrum trading deal, saying it didn't conform to rules after Jio refused to be held liable for the seller's past dues of Rs 2,947 crore.
Jio still retains that stance.
In its latest statement, RCom reiterated that it will take steps to fast-track resolution through NCLT in Mumbai.
“RCom board expects substantial unsustainable debt and liabilities to stand extinguished under the NCLT process,” it stated.
RCom did not comment on its dispute with Ericsson and the Supreme Court order.
But sources within RCom said payments to all operational creditors will be made in accordance with the NCLT process.
Ericsson, however, will continue to pursue contempt case against Ambani, sources said.
“The contempt cases against the chairman will continue and as per SC’s orders, Ambani will have to appear on February 11,” said a second person aware of the development.
“Applying for bankruptcy is another way of circumventing the top court’s orders to pay us Rs 550 crore,” the person said further.
So far, the Swedish company has filed two contempt petitions against Ambani for repeatedly failing to pay the dues despite SC orders.
The SC in January had said the RCom chairman will have to appear in court at the next date of hearing in the contempt case.
Experts said RCom’s call to go ahead and file for bankruptcy protection has turned the tables on Ericsson’s plans just when the latter thought it was very close to getting its payments.
The fear of losing out is further stoked because as per a recent order of the apex court, operational creditors are not at par with financial creditors who have the first claim over money coming through insolvency proceedings, they said.
Ericsson’s initial claim from RCom was for Rs 1,100 crore, which then reached the settlement amount of Rs 550 crore.
Ericsson and DoT are both operational creditors of RCom.
Another operational creditor, HSBC Daisy — a minority shareholder in Reliance Infratel — declined to comment on how RCom’s latest move will have an impact on its settlement amount of Rs 232 crore.
