NCLT gives nod to Reliance Infratel resolution plan

MUMBAI: The dedicated insolvency court has given its nod to Reliance Infratel’s (RITL) resolution plan, thereby paving way for Reliance Jio Infocomm (Jio) to pick up the tower and fibre assets of this bankrupt company after an over 20-month long insolvency process. But the lenders are set to take more than a 60% haircut through the asset monetisation plan of this tower company, which is a wholly-owned unit of bankrupt Reliance Communications (RCom), whose resolution plan – though cleared by lenders in early March – is yet to get the National Company Law Tribunal’s (NCLT) approval.
RITL’s plan was also cleared by lenders along with RCom’s, back in March. Under the plan approved by NCLT on Thursday, lenders may recover less than Rs 4000 crore through the resolution plan of Reliance Infratel, which holds 43,000 towers and 1,72,000 km of fibre, a person familiar with the matter said. This means the lenders have to take at least a 60% haircut in their recovery. Some 13 of the major lenders of RITL had claimed Rs 12,687.65 crore of which Rs 9,665.07 crore was admitted.

Some of the 13 lenders and their claims include State Bank of India (Rs3,628.68 crore), Syndicate Bank (Rs 1,225.18 crore) and Bank of India (Rs 1,064.82 crore), besides Industrial and Commercial Bank of China, or ICBC (Rs 1,832.91 crore), amongst others. Apart from these, there are many other financial creditors who have filed their claims as well. "However, the NCLT Resolution plan distribution is subject to disposal of Doha Bank Intervention Application," the person added. In 2019, Doha Bank and three other foreign lenders claimed that their voting rights in RITL was reduced to 15% from 50% after local lenders invoked bank guarantees of Rs 8,000 crore issued by the company in favour of RCom.



Another legal source added that although NCLT has accepted the plan, it has directed that the recovery money be put in an interest-bearing escrow account of a state-run bank. Aneesh Nanavati of Deloitte was the resolution professional (RP)in this case while Sumit Kumar Khanna, partner and head of corporate finance and restructuring at Deloitte, was advisor to the RP. ET’s emailed queries to Jio and Deloitte didn’t elicit a response. RCom’s resolution plan is still pending with the NCLT. According to the complete plan approved by lenders, RCom and its subsidiary Reliance Telecom (RTIL) will go to asset reconstruction company UVARCL, whereas Reliance Infratel will go to Jio for a total consideration of Rs 20,000-23,000 crore to be paid over a period of seven years.

At the time of filing for bankruptcy, RCom had debt of Rs 46,000 crore. As many as 53 financial creditors, including local and foreign banks, non banking financial companies and funds, have claimed Rs 57,382 crore, of which Rs 49,224 crore has been accepted by the resolution professional. Besides banks, operational creditors such as tower companies, equipment vendors and the telecom department have claimed nearly Rs 30,000 crore in dues, of which over Rs 21,000 crore has been verified. RCom was forced to shut its wireless operations late 2017, hurt by mounting debt and widening losses amid intense competition in the telecom sector after Jio’s entry in September 2016.

It tried to sell its wireless assets, such as spectrum and towers, to Jio, but failed due to a slew of legal cases. This forced the telco, and its units, to opt for insolvency proceedings, which was admitted under the IBC in May 2019.