RCom’s debt reduction process receives boost as Reliance Infratel reaches settlement with minority shareholders
Reliance Communications’ efforts to sell its assets received a boost with subsidiary Reliance Infratel reaching a settlement with minority shareholders. Reliance Infratel, the tower arm of RCom, informed the the National Company Law Appellate Tribunal (NCLAT) that it had reached a settlement with minority shareholders, including HSBC Daisy Mauritius, which holds a 4.26 per cent stake in the company.
RCom had moved the tribunal to get the stay vacated so that it could proceed with the sale of several of its assets. This included its mobile business — spectrum and optical fibre assets. The National Company Law Tribunal (NCLT) had earlier admitted three insolvency petitions filed against RCom and its subsidiaries by Swedish telecom gear maker Ericsson to recover ₹1,150 crore in dues. As a result of this order, RCom cannot sell any of its assets till the case is finalised, jeopardising a deal it has reached with Mukesh Ambani’s Reliance Jio. RCom offered an up-front payment of ₹500 crore to Ericsson in order to halt insolvency proceedings against it.
Why is this important
Though the terms of the settlement were not disclosed, it paves the way for Reliance Infratel to proceed with its asset monetization plan of ₹8000 crore. However, the deal can be finalized only after the Appelate Tribunal lifts the stay. Also it is likely that Ericsson, an operational creditor, will accept RCom’s offer as it would not gain much if RCOM’s assets were to go under the insolvency process
Stocks to be positively impacted
Thus the recent developments are expected to aid RCom’s much stalled debt reduction process impacting it positively
Reliance Communications (CMP: Rs. 16.9, MCap: Rs. 4,673 crs)