Putting an end to the long-running settlement dispute between Reliance Communications (RCom) and Swedish telecom gear maker Ericsson, NCLAT ruling has brought another ray of hope for the Anil Ambani's telecom firm RCom.
Putting an end to the long-running settlement dispute between Reliance Communications (RCom) and Swedish telecom gear maker Ericsson, NCLAT (National Company Law Appellate Tribunal) ruling has brought another ray of hope for the Anil Ambani’s telecom firm RCom. The NCLAT has placed the insolvency of debt-ridden Reliance Communications on hold as Ericsson and RCom have agreed to settle the dispute, television news channels reported. RCom has reportedly agreed to pay Rs 550 crore within 120 days to Ericsson.
The NCLAT on Wednesday allowed banks to complete Reliance Communications (RCom) and Reliance Jio Infocomm, TV channels reported. Earlier on Tuesday, NCLAT had suggested RCom and Ericsson resolve their dispute over dues by 3 pm on Wednesday. This suggestion was proffered by the NCLAT bench when in the course of the hearing RCom offered to make an upfront payment of Rs 500 crore to Ericsson against the total claim of Rs 1,600 crore, the Financial Express reported.
RCom share price rallied as high as 14.73% intraday on Wednesday to a day’s top of Rs 18.3 before settling up 9.72% at Rs 17.5 on BSE. Earlier this week, RCom shares jumped 13% after NCLAT fixed an urgent hearing on insolvency order by NCLT (National Company Law Tribunal) following the appeal filed by RCom with regard to the debt resolution process and appointment of the interim resolution professional.
“We confirm that RCom and Ericsson are at an advanced stage of discussions to expeditiously resolve commercial issues. This will enable Reliance Communications to exit the NCLT process. RCom is confident to expeditiously proceed with its monetisation plan with Reliance Jio and overall resolution plan with the lenders, keeping in mind the interests of all stakeholders,” RCom said in an exchange filing on 18 May 2018.
RCom has been struggling to complete the much-delayed asset sale to Mukesh Ambani-controlled disruptive telecom venture Reliance Jio Infocomm Ltd. A Bloomberg report said earlier this month that billionaire Mukesh Ambani’s prospects for bailing out his younger brother’s telecommunications company are fading after NCLT put Reliance Communications Ltd into insolvency proceedings, which prohibit “connected persons” from acquiring assets of delinquent borrowers.
The country’s bankruptcy court NCLT on 16 May 2018 admitted an insolvency plea by Ericsson against RCom which has potentially delayed the latter’s debt resolution plan in which RCom entered in a deal to sell its assets to Reliance Jio. Ericsson was seeking Rs 1,155 crore from RCom and two of its units. Ericsson had signed a 7-year deal with Anil Ambani’s Reliance Communications in 2014.