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NCLT puts a stay on the sale of RCOM’s tower assets

March 08, 2018

The National Company Law Tribunal (NCLT) has stayed the sale of assets of Reliance Infratel, the tower unit of Reliance Communications (RCOM), till March 13, 2018. The injunction of the Mumbai bench of the NCLT came after HSBC Daisy Investments (Mauritius), a minority shareholder in the tower company, argued that its consent was not sought for the asset sale and, if allowed, would be an oppression of a minority shareholder as Reliance Infratel would become defunct. Further, the tribunal has reserved the order for March 12, 2018.

HSBC Daisy Investments argued that it was unfair that a tower company that made a profit of Rs 18 billion in 2016-17 should be made to give up its assets while only select portions of parent RCOM and Reliance Telecom were being sold as part of the overall asset monetisation programme. The company had invested about Rs 11 billion in July 2007 and has about 5 per cent share, while the rest is owned by other firms under Anil Dhirubhai Ambani Group.

However, Reliance Infratel’s counsel countered that these were delaying tactics that would further erode the value of the operator’s assets and highlighted that the debt burden was the result of turbulence in the industry.

This is another setback for RCOM in its attempt to cut Rs 450 billion of debt. Earlier, an arbitration tribunal in a legal battle with Ericsson stalled RCOM’s asset sale. RCOM is on the verge of selling most of its wireless assets to Reliance Jio Infocomm Limited (RJIL) for about Rs 250 billion. RCOM plans to use the funds raised to repay RCOM’s 35 lenders by the end of March 2018, failing which the lenders could take the company to the NCLT under the Insolvency and Bankruptcy Code.

 

 
 

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