RCom calls off Aircel merger; to seek alternate plans for debt reduction

ENS Economic Bureau | Mumbai | Published:October 2, 2017

Reliance Communications (RCom), controlled by Anil Ambani, on Sunday called off its proposed merger with Aircel. While the merger would have enabled the company to reduce its debt through the strategic debt restructuring (SDR) mechanism initiated by lenders, RCom said its board has considered alternate debt reduction plans including optimisation of its spectrum portfolio.


Legal and regulatory uncertainties and various interventions by vested interests have caused inordinate delays in receipt of relevant approvals for the proposed transaction, RCom said. The company’s SDR deadline will expire in December 2017.

“Unprecedented competitive intensity in the Indian telecom sector, together with fresh policy directives adversely impacting bank financing for this sector have also seriously affected industry dynamics,” RCom said in a statement. “As a result of the various factors aforesaid, the merger agreement has lapsed. The board approved the same,” RCom said.
RCom and Aircel had signed binding agreements in September 2016 for the merger which would have created an entity with assets worth Rs 65,000 crore. RCom and Maxis Communications Berhad (MCB) would have held 50 per cent each in the merged entity with equal representation on the board and committees. The transaction would have reduced RCom’s debt by Rs 20,000 crore, while Aircel’s debt would have gone down by Rs 4,000 crore on closing in 2017, the two companies had said.
While it’s not clear about the fate of the SDR plan initiated by lenders, RCom said, “the company continues to be under a standstill period till December 2018 and expects to complete the SDR process as per applicable guidelines.” In June this year, debt-laden RCom received a breather as lenders agreed to a debt restructuring plan under which RCom got a ‘standstill’ period of seven months to sell assets and repay debt worth Rs 45,000 crore.
Under RBI norms, bankers are allowed to sell the 51 per cent equity in two tranches of 26 per cent and 25 per cent, respectively after locating a buyer. “Shareholders of the company at the AGM held on September 26, 2017 have already approved issuance of equity shares to lenders by conversion of loans,” RCom said.
However, RCom said the board at its meeting held in Mumbai reviewed the ongoing strategic transformation programme and considered alternate plans for debt reduction. “The board decided that RCom will evaluate an alternate plan for its mobile business, through optimisation of its spectrum portfolio and adoption of a 4G focused mobile strategy,” it said.
“RCom already has the unique advantage of capital light access to India’s most extensive world class nationwide 4G mobile network through spectrum sharing and ICR agreements with Reliance Jio,” it said. The combination of the mobile business of Sistema Shyam Teleservices Ltd (SSTL) into RCom is also expected to be completed this month. The addition of SSTL’s valuable spectrum holdings in the 800-850 MHz band will strengthen RCom’s spectrum portfolio by 30 Mhz, and extend the company’s spectrum validity period in 8 important circles in the country till the year 2033 i.e. for another 16 years.
The company has spectrum across 800/900/1800/2100 Mhz spectrum bands aggregating 200 Mhz, valued at over Rs 19,000 crore for the balance of validity period, based on last auction pricing. “The company will evaluate opportunities for monetisation of the same through trading and sharing arrangements,” RCom said.
RCom said it has made good progress in its monetisation plans for prime real estate assets, including at Dhirubhai Ambani Knowledge City, Navi Mumbai admeasuring nearly 125 acres, and prime property near Connaught Place, New Delhi admeasuring nearly 4 acres. “Indications of interest from leading developers, and independent third party valuations, have established significantly higher present value monetisation potential of Rs 10,000 crore for the DAKC Complex alone,” RCom said
The company is engaged with leading global and domestic players, and expects to finalise developments agreements through an open and transparent process over the next few months, it said.
Reference

Comments

Post a Comment

Popular posts from this blog

ED tracks Swiss Bank A/Cs of Agusta scamster

The Poineer February 10,2019 Rakesh K Singh The Enforcement Directorate (ED) has tracked a dozen Swiss bank accounts in the name of Rajiv Saxena, who is key accused in the Rs 3,600 crore AgustaWestland VVIP chopper scam. The ED has also found out accounts held by  his family members and associates where the kickbacks in the now scrapped deal were allegedly parked. Two bank accounts are in the name of Rajiv Saxena’s  associates Pankaj Jain and Sumita Jain who are also the authorised signatories. The  third is in the name of another associate Ajit Singh Bubber, but Rajiv and his family members are authorised signatories. The remaining nine accounts are largely owned and operated by Rajiv, his family members and associates. Rajiv Saxena was deported by the UAE authorities on January 30 and the ED formally arrested him the next day and a court later granted his remand to the agency. He is currently undergoing custodial interrogation by the ED. The agency had in 2017 arrested his
Read more

As financial insecurity rises in urban India, so does investment in insurance

Image
Scroll.in March 13, 2020 Urban Indians are becoming less confident about their financial security. Up to 58% of them fret over financial independence post retirement, which is a 4% increase from last year. An equal share of urban Indians worry about meeting their daily medical expenses and sustaining their current lifestyle once they stop working. The findings are part of a survey published by Delhi-based Max Life Insurance in association with London-based consultancy Kantar. The firms surveyed 7,014 respondents in 25 cities, including six metros, nine tier-1 cities, and 10 tier-2 cities, between December 2019 and January 2020. Source: Max Life Insurance via Quartz The trends Source: Max Life Insurance via Quartz Source: Max Life Insurance via Quartz Source: Max Life Insurance via Quartz A significant share of urban Indians also say their families will have no financial support in the event of the breadwinner’s death. In such a scenario, around 57% believe the family sav
Read more

India Joins Russia in Voting Against West-Backed Move to Expand Powers of OPCW

The Wire: June 28, 2018 New Delhi: India voted against a UK-backed move that will allow the global chemical weapons watchdog to apportion blame for illegal attacks, criticising the decision to grant “unchecked powers” to the head of the group which could be used for “partisan” purposes. On Wednesday, more than two-thirds of the member states of the Organisation for the Prohibition of Chemical Weapons (OPCW) voted to authorise the international body to identify the perpetrators and sponsors of a chemical weapons attack. It also specifically called on the OPCW’s technical secretariat to begin work on identifying the perpetrators behind the use of chemical weapons in Syria. The draft decision, sponsored by 30 countries, was adopted at the fourth special session of the conference of the states parties to the Chemical Weapons Convention at the Hague, with 82 in favour and 24 negative votes. While Europe, the United States and their allies voted ‘yes’, there was strong oppo
Read more