Hearing from Sept 13: NCLT admits RCom pleas on stake sale in arm, merger

The NCLT ruling came after it heard some of the operational lenders of RCom and Aircel, who had requested the tribunal to convene a meeting of the creditors to assess the impact of the merger before it admits the merger scheme.

Anil Ambani-led RCom is merging its wireless business with rival Aircel and is also selling a 51 per cent stake in its radio masts business to Canada’s Brookfield Infrastructure Group for Rs 10,000 crore.

The RCom-Aircel combination will create a telecom operator ranked fourth by customer base and revenues and number three operator by revenues in 12 important circles. RCom and Maxis Communications Berhad (MCB) of Malaysia, which owns Aircel, will hold 50 per cent each in the merged entity with equal representation on the board and committees. The merged company will be one of India’s largest private sector companies, with an asset base of over Rs 65,000 crore and net worth of Rs 35,000 crore ($5.2 billion).

After completion of the merger, RCom’s overall debt will reduce by Rs 20,000 crore or over 40 per cent of its debt, and Aircel’s debt will reduce by Rs 4,000 crore. The deal assumes significance as the lenders of RCom have agreed to a strategic restructuring plan under which it will get a 7-month standstill till December 2017 to service loans amounting to Rs 45,000 crore.

RCom and Aircel had already received approvals for the merger scheme from the Stock Exchanges, the Securities and Exchange Board of India (SEBI), the Competition Commission of India (CCI) and the shareholders of both companies. Earlier, while announcing the quarterly results, Reliance Communication said referring to the transactions, “As part of this transaction, RCom’s overall debt will reduce by Rs 14,000 crore, together with transfer of liability for spectrum installments of an additional approximately Rs 6,000 crore.”

Upon completion of the Aircel merger and sale of the tower business, RCom’s debt will stand reduced by about Rs 25,000 crore, or 60 per cent, it added.

The Anil Ambani-controlled company, which has delayed repayment of loans to more than 10 banks, plans to repay Rs 25,000 crore worth of loans to its lenders with proceeds from its deals with Aircel and Canada’s Brookfield Infrastructure.

Earlier, ratings agencies Fitch and Moody’s downgraded Reliance Communications’ debt rating deeper into junk grade, spelling fresh troubles for the company.