On December 28, on the date of the deadline for conversion of debt to equity, Anil Ambani's Reliance Communications (RCom) signed a definitive agreement with big brother Mukesh Ambani's Reliance Jio and bought itself some time from lenders.
On December 28, just on the deadline of conversion from debt to equity by the Banks under the Reserve Bank of India Strategic Debt Restructuring (SDR) regulations Anil Ambani’s Reliance Communications (RCom) signed a definitive agreement with big brother Mukesh Ambani’s Reliance Jio and bought itself some time from lenders. Nearly 10 days later, its Chinese lender, which had moved the insolvency court for a debt of Rs 9,000 crore, withdrew the case. However, RCom’s legal trouble is far from over.
A petition was filed by a Karnataka-based company, Manipal Technologies for a due of about Rs 2.74 crore from the troubled RCom. Agencies on Thursday reported that the dispute between the two companies is not over and the National Company Law Appellate Tribunal (NCLAT) will hear the case on January 25.
Manipal Technologies supplied fingerprint scanners to RCom in 2016. However, the money was not paid as RCom claimed that the invoices were raised in the name of HP financial services and not RCom. Earlier, it had approached the National Company Law Tribunal, which had rejected Manipal’s plea, accepting RCom’s argument that dues were not against the firm. Following this, Manipal Technologies moved the NCLAT.
RCom has a total debt of Rs 45,000 crore, including Rs 20,000 crore in the form of foreign loans and bonds. After failing to seal two deals with Aircel and Brookfield, Anil Ambani finally turned to his big brother for the deal. “The transaction has happened after a transparent and due process of bidding for RCom’s assets” and “was duly monitored by an oversight committee in which Reliance Jio emerged as the highest bidder for some of the assets…” RCom clarified. According to a Times of India report, Anil Ambani took the decision after Kokilaben Ambani, his mother, caught him in a pensive mood and told him “to ensure no lender loses a single rupee.” Anil Ambani then took the decision to exit the bleeding wireless telecom business.
RCom signed a deal with elder brother Mukesh Ambani’s Reliance Jio to sell four wireless infrastructure assets for Rs 23,000 crore on December 28, the birth anniversary of the late Dhirubhai Ambani. In his latest meeting with lenders, Anil Ambani said, “I owe this money to you morally, rather than legally.” RCom, in the process, has also shut its 2G and DTH services.
However, the legal trouble for RCom does not end with Manipal Technologies’ plea. The insolvency plea filed by Ericsson against RCom for unpaid dues of nearly Rs 1, 150 crore also stands.
(Clarifications received from RCom have been incorporated in the article)