The Reliance Communications (RCom) stock rose up to 20 per cent today, a day after National Company Law Appellate Tribunal (NCLAT) stayed bankruptcy proceedings against the company after it agreed to pay Rs 550 crore to Ericsson to settle a payment dispute. The stock closed 5.71% higher at 18.50 on the BSE. It opened at 19.25 level today and hit an intra day high of 20.85 level on the BSE. The stock has been gaining for the last five days and has risen 30.74% during the period.
It opened with a gain of 10% today. The stock is down 7.50% during the last one year. It has fallen 48.92% since the beginning of this year. Anil Ambani's beleaguered telecom company on Tuesday came out with a fresh offer of Rs 500-crore upfront payment to Ericsson to settle the matter. While hearing the matter on Wednesday, the tribunal asked RCom and its subsidiaries to pay Rs 550 crore as part of the settlement with Ericsson within the next 120 days (by September end) from June 1, failing which the insolvency proceedings would be started against the company. The order of the National Company Law Appellate Tribunal clears the way for Anil Ambani-led RCom to sell its telecom towers, spectrum and fibre assets to Reliance Jio.
A two-member bench headed by NCLAT Chairman Justice S J Mukhopadhaya directed RCom and its subsidiaries Reliance Infratel and Reliance Telecom to pay Rs 550 crore to Ericsson India in 120 days, failing which it will direct insolvency proceedings against the company. Meanwhile, in a statement yesterday, RCom said its management has been reinstated by NCLAT's order.
"RCom's management and board of directors have been reinstated vide this order," RCom spokesperson said.
"RCom expects to now complete the sale of its assets within the next few weeks, having removed legal hurdles of cases by minority investors of RITL, and Ericsson, thereby achieving an overall debt reduction of approximately Rs 25,000 crore from the first phase of its asset monetisation programme," he added.
The appellate tribunal's decision comes as a relief for Anil Ambani's companies. The National Company Law Tribunal on May 15 had triggered the insolvency process against the debt-ridden company after Ericsson registered three separate applications against these companies over the non-payment of dues worth Rs 978 crore, which now total around Rs 1,600 crore. RCom owes around Rs 45,000 crore to as many as 31 domestic and international banks, including over Rs 10,000 crore to a Chinese lender.
Due to mounting losses, the company began to wind down its mobile operations from last November. It was also not servicing the debt for many quarters before that as it was looking to recast the loans but did not materialise and since then many of its creditors had taken RCom to bankruptcy court.
This has prevented the company from closing sale of its telecom tower business to Anil Ambani's elder brother-run Reliance Industries for over Rs 23,000 crore, apart from monetising other assets including selling its sprawling DAKC premises to the Chinese lender and pares debt.