Reliance, Bharti Airtel, 2 others bid for 3 Anil Ambani group companies

11 offers submitted for RCom, Reliance Telecom and Reliance Infratel.

Business Standard : Four companies, including Mukesh Ambani’s Reliance group and Bharti Airtel, on Monday collectively submitted 11 bids for three Anil Ambani group companies, which are up for sale as going concerns as part of the Insolvency and Bankruptcy Code (IBC) process.

The three companies for sale are Reliance Communications (RCom), Reliance Telecom (which holds the spectrum), and Reliance Infratel (which controls the tower and fibre assets). RCom also owns real estate and enterprise businesses.

The bids were opened by the committee of creditors, which held a meeting that continued until late night on Monday in Mumbai. It will meet again on Friday to discuss and possibly finalise the winning bids for the three companies

The value of the financial bids as well as which companies they have bid for, however, could not be ascertained.

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The two other bidders include Varde Partners and Delhi-based U V Asset Reconstruction Company (UVRCL). The latter had earlier won its sole bid for the Aircel group (which was also under the IBC) for Rs 150 crore. However, it is unclear as to whether UVRCL will eventually bring in a telecom or infrastructure partner to join in later. A Reliance Jio spokesperson did not respond to a query and an e-mail to UVARCL remained unanswered.

Under the current regulatory rules, Reliance Jio (which is not a listed entity) acquiring RCom (a listed entity) would require the Mukesh Ambani firm to merge with the latter. However, based on public pronouncements, this is not a possibility — Mukesh Ambani had made it clear that he will take Reliance Jio public through an IPO some time. Sources say that one other alternative would be to delist RCom, as then there would not be any regulatory issues in a merger between the two unlisted companies. Another alternative would be to float a special purpose vehicle to buy the firms.

Bharti Airtel had already given a bid on November 13, the earlier deadline for the bids. But the RP on the request of Reliance had extended the bid deadline by 10 days. The telco protesting against the extension had decided to withdraw its previous bid.

While Bharti Airtel spokesperson did not respond to a query, in its earlier offer it had made a conditional bid for the spectrum. The bid, it said, include that the overall consideration will primarily be by way of the deferred spectrum payables to the government being passed on to the company on terms and schedules applicable to such deferred payments.

How Anil Ambani could arrange funds needed to comply with the SC order

Reliance Communications, and its chairman Ambani, could use the Rs 394 crore received in I-T refunds, but they would still have to raise another Rs 177 crore.

Holding Reliance Communications (RCom) Chairman Anil Ambani and two of the company’s directors guilty of contempt of court, the Supreme Court on Wednesday directed RCom to pay within four weeks Rs 453 crore of the Rs 571 crore it owes telecom equipment maker Ericsson. A failure to do so could land Ambani and the other two in jail for three months.

The Court was hearing three contempt applications that Ericsson had filed against Ambani and others for not clearing its dues.

How will RCom make the payment to comply with the court order? It could utilise the Rs 394 crore of cash that it has received in income-tax refunds in the past few weeks.

The company already deposited in the court Rs 131 crore (net of tax, Rs 118 crore) received from an income-tax refund two months ago.

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The company had requested the court to be allowed to make a part payment of its dues to Ericsson, but the foreign telecom company had rejected the offer and sought a full payment.

Two weeks ago, RCom received Rs 129 crore in a second I-T refund and kept it in a State Bank of India escrow account. According to another I-T order, the company is to get another refund of Rs 134 crore, which, according to sources, should come by next week.

All of these I-T refunds, totalling Rs 394 crore, would still leave a gap of Rs 177 crore. To arrange that, Ambani would have to look at other options. He might look at real estate assets that RCom owns through a subsidiary across the country, including the Dhirubhai Ambani Knowledge City (DAKC), which is valued at Rs 15,000 crore. RCom’s 100 per cent subsidiary GCX also has a cash reserve of $100 million. But real estate deals could take a lot of time to materialise. Considering that, Ambani and RCom might have budget for all factors as they go about finding an answer to where the remainder of the funds would come from.

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