Asset sale to Jio can't happen unless bank guarantee condition is removed: RCom tells Supreme Court

The deal between the two Ambani brothers continues to hang in a balance with the government refusing to go easy on Anil Ambani's Reliance Communications (RCom). The deal in question is RCom's December agreement with Mukesh Ambani-owned Reliance Jio Infocomm Ltd to sell spectrum and other telecom assets for an estimated Rs 25,000 crore in order to partially clear its debt of about Rs 46,000 crore.

On Monday, RCom told the Supreme Court that the asset sale may not go through if approvals aren't in place by mid-December, putting at risk the distressed company's planned debt repayments, Bloomberg reported. In a regulatory filing to the BSE last month, the company had said that it would receive Rs 975 crore from sale of spectrum, and from these proceeds it intended to pay Ericsson, an unsecured creditor of R Com, Rs 550 crore and RITL minority investors Rs 230 crore.

RCom's disclosure had followed the Telecom Disputes Settlement and Appellate Tribunal's (TDSAT) interim order dated October 1, 2018, that stayed the Department of Telecommunications' demand for a bank guarantee of Rs 2,900 crore (a precondition before it allowed the asset sale) and directed it to expeditiously grant its approval for trading of the spectrum.

But the government had subsequently moved Supreme Court against the TDSAT ruling. It has steadfastly maintained that RCom cannot sell spectrum to Jio without either company providing the bank guarantee toward spectrum usage charges.

The Anil Ambani company countered that by saying it has given land valued at Rs 14,000 crore as security for the government's dues and wasn't in a position to provide bank guarantees. But the DoT, so far, has been unwilling to bend the rules to allow land as security.

"If the spectrum sale is not approved, banks will also not get anything," Kapil Sibal, a lawyer representing RCom, reportedly said in court yesterday. The two-judge bench headed by Justice A.K. Sikri will continue to hear the case today.

(Edited by Sushmita Choudhury Agarwal)