NCLT admits RCom-Aircel mega merger petition

The National Company Law Tribunal (NCLT) has admitted to hear the mega merger between Reliance Communications (RCom) and Aircel, and also the Anil Ambani-led company’s petition to sell a stake in its tower arm. The NCLT has also accepted the creditors’ petition, which will be heard on a merit basis.

On Monday, NCLT’s Mumbai bench of judges BSV Prakash Kumar and V Nallasenapathy admitted the merger petition, while the final order would be pronounced on September 13. RCom had announced earlier that it aims to complete the merger by September 30. A number of lenders including China Development Bank (CDB), Standard Chartered Bank and HSBC had consented to the merger before NCLT on August 2. However, tower firms such as Bharti Infratel, Indus Towers, GTL Infrastructure and telecom equipment firm Ericsson had sought clarity on how their dues will be paid.

“No one is opposing the merger, we only want to know how our dues will be settled. Now, the Tribunal will also hear the petition of the creditors along with the merger petition,” an official with one of the creditors said. He, however, refused to be identified.

Earlier, the Department of Telecommunications had stated that the companies require Supreme Court’s permission for the merger. The Tribunal also permitted RCom to sell a 51 per cent stake in its tower arm, Reliance Infratel, to Canadian global asset management company Brookfield Infrastructure Group for ₹11,000 crore in cash. The two transactions would help RCom pare debt by ₹25,000 crore or 60 per cent.

The RCom-Aircel merger was announced in September 2016 to create the country’s third-largest operator, under which RCom and Aircel’s Malaysia-based promoters Maxis Communications Bhd will hold 50 per cent each in a newly-created venture with equal representation on the board.

The merged entity will have amongst the largest spectrum holdings across all operators, totalling 448 MHz across the 850 MHz, 900 MHz, 1800 MHz and 2100 MHz bands. Following the merger, the company will have an asset base of more than ₹65,000 crore and net worth of ₹35,000 crore.

RCom’s overall debt, including the deferred spectrum payment liability, will be reduced by ₹20,000 crore and Aircel’s debt will reduce by ₹4,000 crore upon completion of the transaction.

The Brookfield tower stake sale transaction will bring RCom’s debt down by a further ₹11,000 crore.

Shares in RCom rallied and closed up 16.14 per cent at ₹24.10 on the BSE, which ended up 0.75 per cent on Monday.