NCLT halts Reliance Infratel’s asset sale
HSBC Daisy-led investors have argued that Reliance Infratel would become defunct after the RCom-Reliance Jio deal as it would not have any assets left
Mumbai: The Mumbai bench of the National Company Law Tribunal (NCLT) on Wednesday directed Reliance Infratel Ltd, a subsidiary of Reliance Communications Ltd (RCom), to stay the sale of its assets until 13 March.
The tribunal was hearing a petition filed by offshore investors of Reliance Infratel led by HSBC Daisy Investments (Mauritius) Ltd, which are alleging oppression of minority shareholders and mismanagement.
After hearing the arguments of Reliance Infratel, overseas investors and the joint lenders’ forum of RCom, the NCLT division bench of B.S.V. Prakash Kumar and Ravikumar Duraisamy reserved its final order, to be released on 12 March.
This might create a minor hiccup as the Anil Ambani-owned company has entered into a binding agreement to sell off parts of RCom’s assets to Reliance Jio Infocomm Ltd, controlled by Anil Ambani’s older brother Mukesh Ambani. An RCom spokesperson declined to comment.
Earlier on 28 December, both companies in separate statements said that Reliance Jio had emerged as the highest bidder for the wireless spectrum, tower, optical fibre network and media convergence node assets of RCom. The companies did not disclose the deal value.
HSBC Daisy-led investors argued that the company in which they had invested—Reliance Infratel—would become defunct because it would not have any assets left.
“When we had invested Rs1,100 crore in the company, under the agreement, we had the right to know about any changes that (the) company does, but we were not aware of anything that the company did,” argued their counsel Iqbal Chagla.
He further argued that out of the total debt of RCom of around Rs45,000 crore, Reliance Infratel had debt of mere Rs3,400 crore, while the valuation of the latter’s tower business alone was Rs11,000 crore when its parent was in talks with Brookfield to sell assets.
“Currently, all the assets including those owned by Reliance Infratel are mortgaged and today, if the assets are not sold, the lenders will approach the tribunal under insolvency and bankruptcy code to recover their dues,” argued Alpana Ghone, counsel for Reliance Infratel.
“The entire procedure was conducted by the joint lenders’ forum where Reliance Jio was the highest bidder.”
According to Ghone, the sale of RCom group assets will fetch around Rs24,707 crore, out of which the assets of Reliance Infratel will fetch around Rs8,000 crore. Ghone also argued that the valuations of the telecom tower company had gone down because anchor tenant RCom had decided to terminate the rental agreement, and any delay might further dent valuation.
Earlier, on 20 February, Reliance Infratel had agreed to share details of the deal to sell its assets to Jio with shareholders led by HSBC Daisy. These investors are seeking an exit from Reliance Infratel at fair market value.
In July 2007, HSBC Daisy Investment along with a clutch of other investors had invested around Rs1,100 crore in Reliance Infratel for about 5% stake, which has now come down to 4.26%.
Appearing for the joint lenders’ forum, senior counsel Birendra Saraf argued that RCom’s assets, including the tower business, are a pledge and the entire plan was monitored by the lenders; hence, nobody can see any asset in isolation.
Late on Tuesday, in an exchange filing, RCom said that it had appealed in the Bombay high court against an arbitration court which restrained it from sale, transfer or mortgage of its assets.
The arbitration court was ruling on an appeal by Swedish telecom vendor Ericsson, an operational creditor of RCom.
PTI contributed to this story.
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.
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