Select Location
Corporate

Legal Uncertainties to be blamed for failure of Merger between RCom & Aircel

The Merger of Reliance Communication with the Aircel was expected to bring down former company debt by sixty percent. However, in a statement released by Mr. Anil Ambani, he said that the merger between two companies has been lapsed by mutual consent.
832

The Merger of Reliance Communication with the Aircel was expected to bring down former company’s debt by 60%. However, in a statement released by Mr. Anil Ambani, he said that the merger between two companies has been lapsed by mutual consent.

The inordinate delays caused by legal and regulatory uncertainties, several interventions by vested interests, policy directives impacting bank financing for telecom and changed industry dynamic are the reasons to be blamed for the failure of this merger. 

Mr, Anil Ambani is now looking and evaluating alternate plans and policies for optimization of its spectrum portfolio and strategies focused on 4G.  The total debt of company is Rs 42,000 crore and its spectrum portfolio has value of over Rs 19,000 crore.

After the failure of this merger and slew changes in the telecom industry including legal and regulatory, Mr. Ambani has assured its shareholders that to revive ‘RCom’ company has multiple backup options and it will clarity about the business within this financial year by March 2018. 

The merger with Aircel was not a cakewalk as it had lot of troubles from the begning. China Development Bank, Standard Chartered Bank and HSBC, three of RCom’s main lenders had objected to a petition seeking approval for the merger. Eventually their consent was obtained but then the creditors such as Indus Towers, Ericsson, Department of Telecommunications (DoT), Bharti Infratel and GTL Infrastructure's Chennai Network Infrastructure objected the merger.

If the merger would have gone through it would have prevented the assets worth of Rs 100,000 crore from being obsolete, and would have benefited 90 million consumers, 16,000 retail shareholders and 100,000 employees.
Currently RCom is undergoing strategic debt restructuring under which banks have stopped collecting interest for 210 days that end in December.

Stay updated with Myadvo for legal news and top legal updates in India!

Image Credit

Reviewed by:
Mehak Sharma
Published on 06-Oct-17
832 views