MUMBAI: Reliance Communications has approached the Supreme Court seeking to remove a legal hurdle which threatens to stall its efforts to complete the sale of wireless assets to Reliance Jio Infocomm and repay part of its Rs 45,000 crore debt before the end of March.
RCom moved the Supreme Court last week, after the Bombay High Court dismissed its appeal against an arbitration tribunal ruling to bar the sale or transfer of its assets without prior permission, people familiar with the matter. While the company faces other cases and curbs on transactions of some assets, the arbitration tribunal’s order affects the entire Rs 25,000 crore deal with Jio that is crucial for it to avoid landing in the bankruptcy court.
RCom didn’t respond to an email seeking comment until press time Sunday.
The petition in the Supreme Court is a last ditch effort by RCom, as the company and two of its units, Reliance Infratel and Reliance Telecom, race against time to complete the deal before the end of the fiscal year. It needs the money to repay 35 lenders, failing which they could take it to the National Company Law Tribunal (NCLT) under the Insolvency & Bankruptcy Code.
The Anil Ambani-led telco in late December struck a deal to sell most of its spectrum, fibre, towers and switching nodes to Jio, promoted by Anil’s elder brother Mukesh.
But Swedish telecom equipment maker Ericsson, which is claiming Rs 1,012 crore of arrears from RCom, got an arbitration tribunal order preventing the transfer of the telco’s assets till further orders. RCom approached the Bombay High Court against the tribunal’s order, but its appeal was dismissed over a week ago.
RCom's stance in the case is that secured creditors, such as banks, rank above unsecured vendors like equipment supplier like Ericsson in any debt resolution plan. After the high court dismissed its appeal, the company said it would take “necessary actions in the best interest of all the stakeholders”.
The telecom company is in the midst of several other legal battles that have thrown a spanner in its efforts to sell assets. It is expected to shortly appeal at the National Company Law Appellate Tribunal against an NCLT stay order on the sale of its towers and optic fibre assets.
The NCLT last week restrained Reliance Infratel from selling its towers and fibre to Jio for about Rs 8,000 crore till further order. That order came on a petition by HSBC Daisy Investments and some other minority shareholders — together holding just over 4% in the tower company — that their consent was not sought for the asset sale and, if allowed, it would be an “oppression of a minority shareholder under section 397 and 398” as Reliance Infratel would become defunct.
RCom also faces a spate of other lawsuits on recovery of arrears. Last month, American Tower Company moved the Delhi High Court against the telco and subsidiary Reliance Telecom to get security for recovery of Rs 100.63 crore of dues. It claimed that carrier had not made payments for services provided to it from July to December last year. Last week, communications solutions provider Avaya India also moved the NCLT for recovery of Rs 7.5 crore.