Reliance Communications Says NCLT Proposal To Be Similar To Previous Plans
Reliance Communications Ltd. said it plans to propose a similar debt resolution plan in the bankruptcy court as was being earlier pursued with creditors.
The key elements of the plan will remain unchanged, including the sale of all strategic telecom infrastructure assets and spectrum, the development of its Navi Mumbai real estate projects spanning across 30 million square feet at the Dhirubhai Ambani Knowledge City complex and the sale of other realty assets, the Anil Ambani-controlled company said in a press statement. The proposal will also retain plan to monetise its subsidiary Global Cloud Xchange, Reliance Data Centre and its India enterprise business.
This comes after the debt-laden telecom operator opted for insolvency proceedings at the National Company Law Tribunal as it failed to pay back its lenders. RCom, with a debt of more than Rs 47,000 crore in the previous financial year, invoked strategic debt restructuring in June 2017. It was expected to sell spectrum, towers, fibre and other assets worth Rs 25,000 crore to older brother Mukesh Ambani’s Reliance Jio Infocomm Ltd. RCom had filed a contempt plea against the telecom department in January for not approving the sale of its spectrum and towers to Reliance Jio. The sale was crucial for RCom to fend off insolvency proceedings, and it expected to fetch Rs 18,000 crore from the deal.
It faced a fresh blow when the Supreme Court rejected its plea seeking more time to pay Rs 550 crore to Ericsson.
‘Untenable Issues’ And ‘Unreasonable Minority Lenders’
RCom, in the statement, said “untenable issues” raised by the telecom department led to legal entanglements, which will now be addressed under the NCLT process.
The company said the challenges raised by “unreasonable minority lenders” could now be overcome through the NCLT’s 66 percent majority rule—the voting threshold for all major decisions has been lowered to encourage resolution—against the 100 percent approval rule outside the tribunal.
The company’s board also expects “substantial unsustainable debt and liabilities” to be extinguished under the NCLT process, according to the statement. Without exercising its voting rights, the company said it will participate in the resolution process and expects the support of the committee of creditors, resolution professionals and the NCLT. “The board remains confident on future prospects as a going concern under a new ownership on completion of the NCLT resolution process,” it said.