Proposals Offered by RCom Rejected by Ericsson

Proposals Offered by RCom Rejected by Ericsson

New Delhi: Ericsson, the Swedish telecom equipment maker, rejected the two proposals of Reliance Communications, owned by Anil Ambani. This has put the negotiations for a settlement between the two – Ericsson and RCom – at a deadlock.

As per the sources, who know about the development, the proposals offered by RCom were – either a payment guarantee by the company controlled by Anil Ambani or an undertaking by the directors of the telecom company and its two units Reliance Infratel and Reliance Telecom so as to pay Ericsson within 15 days if it withdraws its insolvency petition at NCLT.

It should be noted that Ericsson filed a petition against RCom in bankruptcy court over non-payment of more than 1,000 crore of dues and NCLT (National Company Law Tribunal) has accepted its petition last week.

According to a person who is directly aware about the developments said that on what basis Ericsson will accept further promises as this has been going on for eight months. Petition can’t be withdrawn until and unless the payments are made and apart from this there was no details about the Ambani-owned company in the proposal.

Notably, last week RCom said that for speedy resolution of commercial issues the discussions with Ericsson are at advanced stage. The company said that it was confident that the monetization plan with Jio and overall resolution plans with its lenders with interests of all stakeholders intact would finalize soon.

If the sources are to be believed, since the lenders of RCom and its units refused to provide any payment guarantee to operation creditors the latest offers were given to them. The finance and legal teams of both the company also had a conference call yesterday to have a discussion on the proposals.

In the meantime, the interim resolution professionals (IRPs) appointed by the NCLT for both the subsidiaries of RCom – Reliance Infratel and Reliance Telecom have asked the creditors to submit details of dues that both the companies owe to them.

Mitali Shah, the IRP for Reliance Telecom Limited and MD Kaneria, the IRP for Reliance Infratel have issued separate notices to all the financial as well as operational creditors where they informed them that the last day for submission of claims is June 1st. These notices were sent on May 21st.

It is also being said that there will about a month’s time with IRPs – from the day order was announced i.e. May 15th – to set up a (CoC) committee of creditors where they will give the solutions like sale of assets so as the company can get back on track.

A time frame of 180 days – till November 11th – has been set by the IRPs to finish the process.

As Ericsson moved to NCLT, this has put the plan of telco to sell assets so that they can pay their debtors. To lessen the debt of Rs. 46,000 crore, RCom had planned that it will sell its assets which included towers, fibre network and spectrum to Reliance Jio for Rs 18,000 crore.