Direct Aircel to get SC nod for merger with RCom: DoT to NCLT

The NCLT is currently hearing the RCom-Aircel merger proposal and a proposal for RCom’s 51% stake sale in its tower business

Aircel, Aircel Reliance tie up, reliance communication, Department of Telecommunications, Supreme Court on Aircel Reliance tie up

DoT requested NCLT in Mumbai to direct Aircel to obtain Supreme Court’s permission for its proposed scheme of arrangement with Reliance Communications Ltd of the Reliance Anil Dhirubhai Ambani Group. (Representational Image)

The Department of Telecommunications (DoT) on Wednesday requested the National Company Law Tribunal (NCLT) in Mumbai to direct Aircel to obtain Supreme Court’s permission for its proposed scheme of arrangement with Reliance Communications Ltd of the Reliance Anil Dhirubhai Ambani Group. The NCLT is currently hearing the RCom-Aircel merger proposal and a proposal for RCom’s 51 per cent stake sale in its tower business. RCom has agreed to merge its mobile phone services business with Aircel. 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.

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On Wednesday, Beni Chatterjee, senior counsel representing DoT filed an affidavit before the NCLT stating that the apex court had in January restrained Maxis from earning any revenue “by using the 2G Spectrum licences, which were originally granted to Aircel Telecommunications”. Chatterjee said the DoT will not give its approval to the merger till the SC formally sanctions the scheme.

According to Aircel’s legal counsel, Navroz Seervai, the company has already brought the salient features of the scheme to the notice of SC and the apex court has not raised any objections. Apart from this an operational creditor of Aircel has pleaded before the tribunal to convene a meeting of the creditors of Aircel to assess the impact of the merger before it admits the merger scheme of RCom and Aircel.

“It is for the NCLT to decide if the scheme affects the rights of the creditors. And the court can do that analysis only with the assistance of the creditors. For that creditors meeting has to be commenced by the tribunal,” said Ravi Kadam, senior counsel representing Chennai Network Infrastructure Ltd, an operational creditor of Aircel.

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