India’s debt-laden RCom boosted by Supreme Court order
Reliance Communications must now furnish bank guarantees of 14 billion rupees within two days to the Department of Telecom
Shares of troubled Reliance Communications Ltd (RCom), owned by Anil Ambani, surged on Friday after a Supreme Court order paved way for the sale of its spectrum assets to Reliance Jio Infocomm Ltd, owned by elder brother Mukesh. At 1.30pm it was trading at 13.85 rupees, up from its previous close of 12.75 rupees on the National Stock Exchange.
Spectrum assets are licensing rights purchased by a telecommunications company that entitle it to transmit signals over a specific band of the electromagnetic spectrum.
The Supreme Court ordered RCom to furnish bank guarantees of 14 billion rupees (US$200.63 million) within two days to the Department of Telecom (DoT). The court asked the government to clear the spectrum sale within seven days after the guarantee is submitted and said that a corporate guarantee, backed by properties as assurance, will be sufficient, Bloomberg reports.
Reliance lawyers have assured that its realty arm Reliance Realty will provide the requested corporate guarantee within two days.
The DoT had earlier said it was unable to issue a no-objection certificate for the sale of assets of RCom until it received a bank guarantee of around 29.4 billion rupees, more than double the guarantee required by the Supreme Court ruling.
Reliance Jio had earlier agreed to buy RCom’s spectrum, towers and other assets to help it repay debt. RCom currently owes bank creditors around 460 billion rupees ($6.592 billion).