Reliance Communications (Rcom), a few days after it scrapped its merger with Aircel, has now withdrawn a scheme to demerge its towers into a separate company from the National Company Law Tribunal (NCLT) and said it will file it afresh, the company said.
The demerger was to happen to enable stake sale in the tower unit to Canada’s Brookfield
The Anil Ambani-owned telco said on Wednesday that it will file a fresh scheme of demerger of the towers of Reliance Infratel before the NCLT “in due course.” Sources said RCom expects to file a fresh demerger scheme in the NCLT next week after re-negotiating the Rs11,000-crore deal for its stake in tower unit Reliance Infratel to Brookfield. The valuation is now expected to be lower.
“With the RCom-Aircel merger now off, the tower deal valuation will be impacted,” said brokerage CLSA in a note.
A person familiar with the matter said that the talks between the two sides were on as both were keen on the deal. “But one needs to keep in mind that RCom needs this deal more than Brookfield”.
On Sunday, RCom said it had scrapped its merger with Aircel by mutual consent and followed that up by withdrawing the merger scheme from the NCLT on October 3. The scrapping of the deal thus affected the valuation of RCom’s stake sale in Reliance Infratel to Brookfield, which was pegged on tenancies from the RCom-Aircel combine.
“As a consequence, the application for the withdrawal of the scheme of the demerger of the tower business under RITL has also been concurrently filed as on 3 October 2017. The RITL tower demerger scheme shall, in due course, be taken up for application with the required changes,” RCom said.
In late December, Brookfield had agreed to buy 100% equity in TowerCom Infrastructure, a company in which RCom had hived off its telecom towers, for Rs11,000 crore. Once completed, RCom would have received Class B non-voting shares in the new tower company, providing 49% future economic upside in the tower business based on certain conditions. This meant that the telco would have enjoyed certain information and other rights, but would not have been involved directly or indirectly in the management and operations of the new company.
“The previous investment in a portfolio of over 40,000 towers from Reliance Telecom is conditional on, among other standard conditions, the merger of RCom with Aircel. These initiatives are still underway and as such, closing of the transaction is anticipated by the end of the year,” the investor had said in a release in August.
Rcom’s shares, after crashing to an all-time low on Tuesday, gained 0.3% on the BSE on Wednesday to close at Rs 17.15 apiece.
The telco’s merger with Aircel combined with its stake sale to Brookfield were crucial to its plans to shear some Rs 25,000 crore of its Rs47,000 crore debt. With the first deal off, and the second one being renegotiated downwards, the Ambani firm has chalked out an alternate plan involving sale of tower, fibre, spectrum, and real estate assets, which could generate over Rs 25,000 crore that could be used to repay lenders.
Source: Economic Times