UV Asset Reconstruction Company Limited (UVARCL), which is taking over Aircel with a 74 per cent stake, is planning to pay around Rs 66.3 billion to the Aircel’s financial creditors within five years. If the company fails to do this, the lenders will get a 74 per cent stake in the company as against 26 per cent now.

As per a recent National Company Law Tribunal (NCLT) order, UVARCL is taking over Aircel and its two units.

According the NCLT’s recent order, the amount translates into an 89 per cent haircut for lenders who had made claims worth Rs 587.6 billion for the telco’s outstanding loan amount. Further, it added that the total loan amount outstanding to all financial creditors, by all the three companies is approximately Rs 587.6 billion. Whereas the successful the resolution applicant (RA) has proposed to pay Rs 196 billion, out of which, approximately Rs 66.3 billion is to be paid by way of zero-coupon optionally convertible debentures (ZOCD) and balance amount of Rs 129.7 billion is given up.

According to the court, as indicated by the RA, the first tranche of generated funds is likely to be generated within a period of three months from the effective date through the sale of fibre assets. The RA will use all efforts to make payments towards CIRP cost and creditors’ payments within five years from the effective date. If such payments are not paid, ZOCD will be converted into equity shares.

The order mandates the payment of Rs 2.9 billion as corporate insolvency and resolution process cost in priority to all other debts.

In the first tranche, UVARCL expects to generate Rs 9.5 billion- Rs 15.1 billion through sale of spectrum, fibre assets, real estate, towers, equipment, IP addresses etc. Besides, sources of funds identified under the resolution plan include, refund of Rs 2.9 billion by Department of Telecommunications (DoT), return of bank guarantee of Rs 4.5 billion by Bharti Airtel and Rs 110 million upfront equity infusion commitment by UVARCL.

The company will also infuse initial expenditure of Rs 40 million for restarting business operations such as bulk SMS, data centre and leasing of towers. This is expected to generate a revenue of Rs 690 million rupees in the first year, Rs 960 million in the second year and Rs 1,250 million in the third year of operations.

The lender of Aircel and its units Dishnet Wireless and Aircel Cellular include State Bank of India, Bank of Baroda, Punjab National Bank, China Development Bank and Canara Bank.