At the same time India’s bankruptcy court has agreed that RCom can complete a pair of deals to raise the equivalent of $1.7 billion by selling off its assets.
The sale will not include Global Cloud Xchange (GCX), which has been ring-fenced from the insolvency and which is in negotiation with three unnamed companies to acquire it – but the decision will clear the way for GCX to consider those bids.
RCom will sell its real estate in New Delhi and Chennai to the Canadian company Brookfield Asset Management for $118 million.
At the same time it will sell its spectrum, towers and Indian fibre and switches to unrelated rival Reliance Jio, a company that was started by Mukesh Ambani, the brother of RCom’s boss Anil Ambani. RCom has already shut down its mobile telecoms business after facing huge competitive pressure from Reliance Jio and other companies in the market.
Two years ago RCom was poised to sell a majority stake in its tower assets to Brookfield but that deal was dropped because RCom failed to merge with rival operators.
RCom has also settled its disputes with the minority shareholders in Reliance Infratel, the subsidiary that owns its towers.
RCom expects to complete all its asset sales within the next few weeks..
India’s National Company Law Appellate Tribunal agreed the deals, totalling $2.7 billion in value. RCom has to pay Ericsson its money by the end of September and the asset sales are expected to be finalised shortly. The tribunal will meet on 4 October, when it hopes to hear from Ericsson that the debt has been paid: at least the 5.5 billion rupees of the 10 billion rupees ($150 million) that was owing.
RCom’s total debt is 460 billion rupees ($6.8 billion). It’s unclear how that remaining money will be paid off.
Last week Capacity reported that GCX was considering three bids – and that one bidder was also interested in its Indian enterprise business and its Mumbai-based data centre business. All three bidders are interested in GCX’s new Eagle subsea project – from Mumbai to Italy via the Middle East and from Mumbai to Hong Kong. Capacity has not been able to put a figure on the three bids.
