1. Reliance Communications wants to withdraw towers spin-off proposal

Reliance Communications wants to withdraw towers spin-off proposal

Anil Ambani-led Reliance Communications (RCom) will be filing a fresh petition with the National Company Law Tribunal (NCLT) regarding demerger of its tower business in the backdrop of the cancellation of the Aircel-RCom merger.

By: | Mumbai | Published: October 5, 2017 5:52 AM
Reliance Communications, Reliance Communications aircel deal, aircel Reliance Communications deal RCom has filed an application with NCLT for the withdrawal of the merger scheme as well as for the withdrawal of the scheme of the demerger of the tower business under Reliance Infratel. (Reuters)

Anil Ambani-led Reliance Communications (RCom) will be filing a fresh petition with the National Company Law Tribunal (NCLT) regarding demerger of its tower business in the backdrop of the cancellation of the Aircel-RCom merger. RCom has filed an application with NCLT for the withdrawal of the merger scheme as well as for the withdrawal of the scheme of the demerger of the tower business under Reliance Infratel.

“For reasons already stated, the merger agreement for the combination of RCom’s wireless business with Aircel has been allowed to lapse with mutual consent. Pursuant to the same, application for withdrawal of the said merger scheme has been filed with NCLT on October 3, 2017. Furthermore, as a consequence, the application for the withdrawal of the scheme of the demerger of the tower business under RITL has also been concurrently filed as on October 3, 2017,” RCom said in a statement.

The RITL tower demerger scheme will be taken up for application with the required changes and the company will issue relevant notifications at an appropriate future date.

Punit Garg, ED, Reliance Communications, has said the company is hoping to make 100% exit from its tower business and is in discussions with Canadian infrastructure fund Brookfield, though valuations could be impacted in the absence of an upside from additional tenancies from Aircel. In December last year, Brookfield had agreed to pay Rs 11,000 crore for a 51% stake in Reliance Infratel.

Meanwhile, Moody’s Investors Service has said RCom’s cancellation of the merger agreement of its mobile business with Aircel has no impact on the company’s corporate family and senior secured bond ratings, and the ratings outlook remains negative.

On Sunday, RCom announced that the merger agreement of its mobile business with Aircel, signed in September 2016, had lapsed, owing to legal and regulatory uncertainties, interventions by vested interests and delays in the receipt of relevant approvals.

Had the merger gone through, it would have reduced the debt levels of the beleaguered telecom company by Rs 14,000 crore through the transfer of bank debt to the new merged entity — AirCom, together with the transfer of `6,000 crore of deferred spectrum liabilities.

“This transaction was crucial to RCom’s de-leveraging plans. Absent this transaction, the company’s debt levels will remain high and its expected debt restructuring and corporate reorganisation will be further delayed,” Annalisa DiChiara, vice-president and senior credit officer of Moody’s, said.

RCom’s consolidated debt stood at Rs 45,700 crore as on March 31, 2017, including a $300 million senior secured bond due on November 6, 2020, and a $350-million senior secured bond issued by its 100% subsidiary GCX (B3 negative) due on August 2019, Moody’s said.

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