'Reliance Communications' tower arm has reached a settlement with minority investors including HSBC Daisy Investments, a big step towards clearing the way for the sale of the telco's towers and fibre assets to Reliance Jio. The move pushed up RCom's scrip 6.21% on the Bombay Stock Exchange to Rs 16.25 on Tuesday.
According to sources, the Anil Ambani owned company has agreed to pay Rs 232 crore to the minority investors for settling the issue.
Separately, RCom has offered an upfront payment of Rs 500 crore to its operational creditor Ericsson, which has got an insolvency order against the Anil Ambani group firm. Ericsson had total dues of Rs 978, which have now increased to Rs 1,600 crore, counsel appearing for Ericsson informed.
"Reliance Infratel Ltd., a subsidiary of RCOM has informed the Hon''ble NCLAT today that an amicable settlement has been arrived at between it and minority investors holding 4.26% equity in the Company, and consent terms will be filed shortly," RCom said in a statement to the Bombay Stock Exchange.
The settlement with the minority investors paves the way for vacation of the stay granted by the NCLT on the sale of Reliance Infratel's tower and fibre assets, and will enable the company to proceed with asset monetisation of Rs 8,000 crore as soon as the company exits the debt resolution process under NCLT, Rcom added.
This would put to end a long drawn legal battle between the minority shareholders and the Anil Ambani-owned company, which has inked a deal with the telecom arm of elder brother Mukesh Ambani to buy its wireless assets including fibre, towers, spectrum and network nodes for about Rs 18,000 crore. The proceeds will be used to trim Reliance Communication’s debt of Rs 45,000 crore.
The minority shareholders had alleged in the Supreme Court that they were being oppressed and alleged mismanagement for not taking their consent for the asset sale as per the articles of association of the company. They had nvested Rs 1,100 crore in July 2007 and had also filed a contempt petition against the tower arm of RCom for not providing details of its expected asset sale to Jio.
The original petition was filed in 2014, when Rcom proposed Infratel’s merger with another group company on grounds of depressed valuation. The minority shareholders thwarted other attempts to sell tower arm to Tillman Global Holdings and TPG in 2015 and later to alternative asset management company Brookfield in 2016.
The appeal for exiting the insolvency process, supported by all lenders, is fixed for hearing later today before the NCLAT, RCom added in its statement.
However, the matter may come up for hearing tomorrow, along with that of Ericsson which was slotted for today as well.
RCom is also trying to reach an out of court settlement with operational creditor Ericsson, following which it and its subsidiary companies can move out of insolvency. The Swedish gear maker had sought Rs 1150 crore from RCom as dues that the company owes to the network provider.
The matter between Ericsson and RCom also came up in NCLAT today, during which Kapil Sibal represebting RCom told the bench that negotiations were on for Rs 500 crore, to which Ericsson said they would need Rcom and units to pay at least Rs 980 crore, which is the admitted amount. Rajiv Mehra represented Standard Chartered Bank, Tushar Mehta came from SBI, while Ericsson was represented by Salman Khurshid, Anil Kher , Arun Katpalia.
The NCLAT bench has asked both parties to settle and get back tomorrow. Ericsson and RCom will enter round of meetings today, another source said.
On May 15, the NCLT had ordered insolvency proceedings to begin against RCom and its subsidiaries, and had appointed interim resolution professionals to take charge of the companies and come up with a plan to bring them back on track within 180 days.
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