Mumbai: Reliance Communications Ltd (RCom) on Wednesday said the Indian unit of Sweden’s Ericsson has filed insolvency petitions against the telecom company and two of its subsidiaries before the National Company Law Tribunal (NCLT) in Mumbai.
Network services provider Ericsson India Pvt. Ltd, an operational creditor to beleaguered RCom, has sought the intervention of the tribunal for recovering dues totalling about Rs1,154 crore from RCom and subsidiaries Reliance Infratel Ltd and Reliance Telecom Ltd, the Anil Ambani-led company said in a stock exchange filing.
RCom owes Rs491.41 crore and Reliance Infratel and Reliance Telecom owe Rs534.75 crore and Rs129.34 crore, respectively to Ericsson India. The petition could pose hurdles in the debt reduction plans of RCom, which is looking to reduce debt by merging its wireless business and selling stake in its tower arm.
“The company intends to challenge the said petitions,” RCom stated. NCLT will take up the petition on 26 September.
RCom has been looking to merge its wireless division with Aircel Ltd and sell 51% stake in its tower arm to Canada-based Brookfield Infrastructure. RCom expects to net Rs11,000 crore from the stake sale in tower assets and a transfer of Rs14,000 crore of debt to the merged entity. Together, these are expected to more than halve the firm’s nearly Rs45,000 crore debt.
The merger has already been approved by the Securities and Exchange Board of India, the Competition Commission of India and the stock exchanges. Some of RCom’s creditors such as China Development Bank who had earlier objected to the deal as it was not presented to them before being filed with the tribunal have also given conditional consent to the deal. Ericsson was opposed to the merger earlier as well. The, NCLT, however, overruled the objections.
On 14 August, NCLT admitted RCom’s petition for merging its wireless division with telecom firm Aircel and its stake sale in its tower arm. The tribunal is yet to issue final orders. The hearing has now been adjourned to 11 October.
Ericsson has been opposed to the merger as it does not specify how its dues will be repaid. “Ericsson has done this (filed the petition) as a last resort in order to resolve an issue regarding debt that Reliance owes to Ericsson for services provided under a contract. As the legal process is ongoing, we don’t have any further comments at this point,” an Ericsson spokesperson said in an emailed statement.
Lawyers say the merger could be impacted if Ericsson’s petition is admitted before final orders for the merger deal are passed. “If the insolvency petition filed by Ericsson against RCom gets admitted, pending orders of merger between wireless divisions of RCom and Aircel, the said merger would be impacted pursuant to the trigger of moratorium under section 14 of insolvency and bankruptcy board code,” said Nishit Dhruva, managing partner, MDP & Partners, a Mumbai-based law firm.
Section 14 of the bankruptcy code states that from the insolvency commencement date, the adjudicating authority shall declare moratorium and execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority would be stayed for a period of 180 days.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.
As carried in LM on 14/9/2017