Tower companies Bharti Infratel and Indus Towers are the latest to object to a proposal to merge Reliance Communications’ wireless business with Aircel, being heard in the National Company Law Tribunal (NCLT).
Both Bharti Infratel and Indus Towers on Thursday said they needed clarity on how their dues will be paid off by RCom if the merger goes through, while the telecom department reiterated its Wednesday’s stance that the two telcos would need permission from the Supreme Court for the merger since a 2G related case is pending before the top court.
Share of the Anil Ambani-owned telco dropped 7.78% on Thursday to close at Rs 23.10 a piece on the BSE.
An NCLT bench of judges BSV Prakash Kumar and V Nallasenapathy will continue to hear the admission plea on Thursday, August 10.
Infratel and Indus Towers have joined equipment supplier Ericsson, which have outstanding dues to recover from RCom, and GTL Infrastructure’s Chennai Network Infrastructure, which had bought 17,500 mobile towers from Aircel, to object to the merger proposal being heard by the tribunal.
“Post the demerger, assets will be handed over to the new company formed and my client will be left with the liabilities of a shell company,” said the counsel representing tower services company Bharti Infratel. “How will it pay off the debts, what will be its business, we have no clarity on that.”
The creditors said a meeting needs to be convened to discuss the proposed merger before it is taken up by the tribunal.
Senior counsel Janak Dwarkadas who represented RCom argued that a meeting of creditors was not needed since none of the objecting parties had the requisite majority of 5% (of total debt) needed in order to be notified before the petition gets admitted.
Counsels argued on both sides on the debt amount owed and whether they met the requisite majority.
Dwarkadas said the net worth of Aircel today is a negative Rs 17,000 crore and if the merger comes through it would become a positive Rs 32,000 crore. Also, RCom, which is under a debt of Rs 45,000 crore, will have its debt reduced by 60%, he said.
This alliance will prevent assets worth Rs 100,000 crore from being declared obsolete, and benefit 90 million consumers, 16,000 retail shareholders, and one lakh employees, the RCom counsel said, adding that if the merger is not approved by November, the loans would turn non-performing and could lead to liquidation of the company.
He argued that instead of asking for a meeting, the creditors would benefit if the merger process picks up pace.
On Wednesday, China Development Bank, Standard Chartered Bank and HSBC had given their consent for the merger proposal to be admitted by the tribunal. The $6-billion merger of debt-ridden telecom operators RCom and Aircel has already received approvals from SEBI, Competition Commission of India (CCI) and both the BSE and NSE.
The Anil Ambani-owned telco said it’s running against time to complete the merger with Aircel and stake sale in its tower business. The beleaguered telecom company, which has defaulted on some repayment obligations, needs to complete the merger as well as the tower sale within the seven-month breather it has from lenders, which expires in December.
RCom has said it plans to complete both deals by September.
Source: Economic Times