BackNCLT okays Jio’s proposal for Reliance Infratel
The distribution of proceeds under the National Company Law Tribunal (NCLT) resolution plan is still subject to the disposal of an intervention application filed by Doha Bank, one of the lenders to Reliance Infratel
PremiumA bankruptcy court on Thursday approved Reliance Jio Infocomm Ltd’s resolution plan for Reliance Infratel Ltd, in some relief for lenders who stand to receive about ₹4,400 crore for its tower and fibre assets.
Reliance Infratel is a unit of bankrupt Reliance Communications Ltd (RCom). Reliance Jio, owned by Asia’s richest man Mukesh Ambani, had bid for only this subsidiary of RCom.
The distribution of proceeds under the National Company Law Tribunal (NCLT) resolution plan is still subject to the disposal of an intervention application filed by Doha Bank, one of the lenders to Reliance Infratel. Doha Bank has contested that its voting rights and outstanding dues have been reduced by the committee of creditors.
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According to the plan approved by lenders, RCom and its subsidiary, Reliance Telecom Infrastructure Ltd will go to UV Asset Reconstruction Co. Ltd while the tower unit, Reliance Infratel, will go to Jio. The total consideration under this resolution plan of ₹20,000-23,000 crore will be paid over seven years.
Reliance Industries, the parent of Jio, did not immediately reply to a query seeking comment.
China Development Bank, Life Insurance Corp of India, State Bank of India, Exim Bank of China and Bank of Baroda are among 41 creditors to the bankrupt telecom firm.
According to information available on RCom’s website, it owed financial creditors ₹49,193 crore. Besides, Reliance Telecom and Reliance Infratel owe financial creditors ₹24,306.27 crore and ₹12,687.65 crore, respectively. RCom thus owes debtors ₹86,188 crore at a consolidated level. This is besides the ₹28,837 crore it owes the department of telecommunications in spectrum dues and other charges as well as dues to operational creditors.
While the NCLT approval paves the way for the sale of physical assets of RCom, legal clarity is awaited on sale of spectrum airwaves under the Insolvency and Bankruptcy Code (IBC). After the top court asked the Centre in August how it plans to recover adjusted gross revenues from bankrupt telcos (such as Aircel and Videocon), DoT objected to the sale of RCom’s spectrum to UV ARC. If the resolution plan by UV ARC is approved, DoT will recover little as under IBC, entities like DoT are operational creditors, second in line for dues after financial creditors.
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