New Delhi: Mukesh Ambani, chairman of Reliance Industries Ltd, has provided a Rs 462-crore bailout to younger brother Anil Ambani, potentially saving the chairman of the debt-ridden telecom firm Reliance Communications Ltd (RCom) from a jail term in a case involving a payout to Swedish company Ericsson.
Anil Ambani thanked his elder brother Mukesh and his wife Nita Ambani for the monetary help after Swedish telecom equipment maker Ericsson said on Monday that it has received Rs 462 crore from RCom.
In February, the Supreme Court had found Anil Ambani guilty of contempt of court for wilfully failing to pay Ericsson. The court had ordered Anil Ambani and two RCom directors to pay Ericsson Rs 453 crore within four weeks or face a three-month jail term for contempt of court.
This is the second time that Mukesh Ambani has come to the rescue of his brother after their famous feud that dogged the Reliance Group and ended up splitting it into two between the two brothers.
In 2018, Reliance Jio Infocomm, controlled by Mukesh Ambani, bought RCom’s wireless assets for Rs 3,000 crore, in a sign that the acrimony of the past was buried.
RCom, which owes a total Rs 571 crore to Ericsson, including a one-time settlement of Rs 550 crore plus interest, had already deposited Rs 118 crore with the Supreme Court in February. The Swedish firm signed a deal in 2014 to manage and operate RCom’s network and last year approached the court over the unpaid dues.
RCom has struggled for cash partly a result of a price war triggered by the market entrance of Reliance Jio Infocomm, popularly called Jio.
With Monday’s payment of Rs462 crore, the debt laden telco ends its 18-month long battle with Ericsson.
RCom’s shares plunged 9.3 percent on Monday to close at Rs 4 on the BSE. The telco, which was once India’s second largest, was forced to shut has its wireless business late 2017 amid plunging revenue, widening losses and weighed under a debt of Rs 46,000 crore.
The company’s attempts to pay part of the Rs 580 crore dues, including interest, to Ericsson with its income tax refunds of Rs260 crore failed with the National Company Law Appellate Tribunal (NCLAT) refusing to direct the lenders, including main financial creditor State Bank of India, to release the funds.
The battle between Ericsson and RCom started when the Swedish company moved a bankruptcy court in 2017, alleging that it had not been paid dues of around Rs 1,500 crore after signing a seven-year deal in 2013 to operate and manage the telco’s nationwide network.
The case moved from the National Company Law Tribunal (NCLT) to the National Company Law Appellate Tribunal (NCLAT) where the settlement amount of Rs 550 crore was reached between the two parties with the deadline being September 30.
With RCom not meeting the deadline, Ericsson moved Supreme Court, which gave RCom another deadline – December 15, 2018 – to repay dues, both of which were missed by RCom.
When the principle settlement amount of Rs 550 crore was not paid, Ericsson filed three contempt petitions against Anil Ambani, chairman of RCom, and its two units were made party to the case.
The apex court, in February, held Ambani in contempt for not paying Ericsson’s dues despite having the money to do so. As per Supreme Court’s orders, March 19 was the last day to make the payment which included penal interests.
Source: News18