The committee of creditors (CoC) overseeing the bankruptcy resolution of Reliance Communications (RCom) expects to raise at least Rs 14,000 crore from the sale of the telco’s assets, including spectrum, fibre and towers, based on bids received, said people with knowledge of the matter.
“The final round of negotiations with the four bidders will start now since the deadline for resolution is January 10,” said one of them, a CoC member. “The bids that have come in are good… the CoC expects to touch Rs 14,000 crore at least.”
At that level, the haircut would be about 70% for financial lenders that have filed claims of Rs49,000 crore against RCom and its units Reliance Telecom and Reliance Infratel.
In the ongoing insolvency process being run by resolution professional (RP) Deloitte for RCom and its two units, assets up for sale include airwaves in the 850 MHz band in 14 of India’s 22 telecom circles, about 43,000 telecom towers, some fibre and data centres. The RP needs to end the insolvency proceedings by January 10, as mentioned above.
The spectrum is the most valuable asset. The bankruptcy court had, in a separate insolvency proceeding for Aircel, ruled that the CoC can sell airwaves, rejecting a telecom department plea. The government wanted the spectrum to be returned to it due to unpaid dues, saying it was the owner of the airwaves, and not the telcos. The Department of Telecommunications (DoT) is expected to challenge the National Company Law Tribunal (NCLT) order soon.
Bharti Airtel has made the highest bid of Rs 9,000 crore and has offered upfront payment but wants all the assets and not parts of it, said the people cited above. However, the CoC feels it will get better value by selling the assets separately.
“Jio interestingly has bid only for the tower and fibre assets with an upfront payment offer of Rs 3,600 crore,” one of the persons said.
Private equity fund Varde Partners and UV Asset Reconstruction Company Ltd (UVARCL) have said they will pick up the assets as a going concern and repay lenders as and when they manage to sell towers, fibre and spectrum to other buyers later.
“UVARCL has said they already have a spectrum sale deal worth Rs11,000 crore,” said the person. There’s nothing to stop any telco, including Reliance Jio Infocomm, from buying the spectrum from the asset reconstruction company at a later stage, he said.
Bharti Airtel, Jio, UVARCL and RCom didn’t respond to queries. Vaarde Partners and Deloitte declined to comment.
Jio had earlier sealed a deal to buy 122.4 MHz of RCom’s spectrum for Rs7,300 crore, but the deal fell through after the telecom department refused approval over the question of who would be responsible for the company’s past dues.
At the time of its bankruptcy filing, RCom had debt of Rs 46,000 crore, making it one of India’s largest insolvencies. As many as 53 financial creditors, including local and foreign banks, nonbanking finance companies and funds, have claimed Rs 57,382 crore as dues from the company, out of which Rs 49,224 crore has been accepted by the resolution professional.
Top Indian financial lenders include State Bank of India with a verified exposure of over Rs 4,800 crore followed by Bank of Baroda (Rs 2,500 crore), Syndicate Bank (Rs 1,225 crore) and Punjab National Bank (Rs 1,127 crore). Top overseas lenders include China Development Bank (Rs 9,900 crore), Exim Bank of China (over Rs 3,356 crore) and Standard Chartered Bank (Mumbai and London, Rs 2,100 crore).
Besides banks, operational creditors such as tower companies, equipment vendors and DoT have claimed nearly Rs 30,000 crore in dues, of which over Rs 21,000 crore has been verified. By contrast, in the case of Aircel, the resolution plan has earmarked just about Rs 16.5 crore for hundreds of operational creditors, which had claimed about Rs 20,000 crore in dues.
Source: Economic Times