Published: Wed, March 20, 2019
Money | By Ethel Goodwin

Reliance Communications jumps after Mukesh Ambani bails out brother Anil

Reliance Communications jumps after Mukesh Ambani bails out brother Anil

Separately, Ericsson has received 4.62 billion rupees ($67.42 million) from Indian telecoms firm Reliance Communications Ltd, the Swedish company said on Monday, potentially saving billionaire Anil Ambani and two RCom directors from a jail term.

The asset sale agreements, signed on December 28, 2017 and August 11, 2018, were supposed to reduce RCom's debt but regulatory and legal hurdles delayed the completion of the deal.

"The said transactions have become incapable of being consummated in accordance with the terms thereof, on account of various factors and developments since the execution of the said agreements almost 15 months ago.", RCom said in a regulatory filing.

In February, the Supreme Court found Anil Ambani guilty of contempt of court for willfully failing to pay Ericsson. It had threatened to send the billionaire as well as Chhaya Virani and Satish Seth - chairmen of two RCom units, to jail if they fail to pay the dues in four weeks.

An heir to rags-to-riches billionaire Dhirubhai Ambani, Anil, has been entangled in a Bollywood-like feud with his brother over their father's firm that once was India's most valuable company.

The company in another press release further said the agreement between the company, RTL, RITL (RCOM Group) and Reliance Jio for sale of certain specified telecom assets was terminated by mutual agreement.

"The termination of the Master Agreement shall not, in any manner, affect the rights and obligations of the parties, accrued prior to the date of termination", Jio said in a separate statement, making it clear that the deal to buy switching nodes and fibre from RCom, which had been completed, stood. It extracted a personal guarantee from Ambani to pay the dues.

File image of Reliance Group chairman Anil Ambani.

The company mentioned multiple reasons for cancellation of the deal including "non-receipt of consents/objections from RCom's over 40 foreign and Indian lenders in relation to the proposed transactions" and "non-receipt of requisite permissions and approvals from the Department of Telecommunications (DoT)".

Anil Ambani, whose businesses in telecom and power sectors ran into heavy debt in the face of changes in regulations and increased competition, issued a statement on Monday thanking both Mukesh Ambani and his sister-in-law Nita Ambani for bailing him out.

After rising by its daily maximum limit of 10 per cent and hitting upper circuit, RCom today ranked top in the BSE gainer's list and also among the top gainers in BSE 500 index.

RCom had also planned to sell airwaves and mobile masts to Jio, and real estate to other buyers for 181 billion rupees ($2.64 billion) in a bid to shore up its finances.

RCom is committed to a comprehensive resolution of its overall debt, with transparency, certainty and finality, through the NCLT process, it concluded. The next hearing at the NCLAT is on April 8.

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