Reliance Jio Agreement to Acquire Reliance Infratel Closer to the Finish Line; lenders must give details of the forensic audit
Reliance Jio Infocomm’s (RJio) 2020 deal to acquire Reliance Infratel (RITL), the tower arm of Reliance Communications (RCom), is finally moving towards closing, with lenders agreeing to provide medical audit details -legal who called the latter’s account a “fraud”. ‘.
“The lenders have agreed to hand over details of the forensic audit (to RJio) this week, and once the data has been reviewed and if there are no further discrepancies, the acquisition would close immediately. We expect to close the deal within 10-15 days of getting the audit,” a source familiar with the development said.
In May 2018, RCom’s Indian lenders referred the company and its subsidiaries – RITL and Reliance Telecom – to the National Company Law Tribunal (NCLT), after the company, then controlled by Anil Ambani, failed to pay dues worth Rs 46,000 crore.
“Under the bankruptcy code, a fraud tag would not apply to the new owners of the business. However, RJio wants to make sure everything is in order before closing the deal,” a banker said.
Earlier this month, four financial institutions, including two Chinese banks, wrote to Finance Minister Nirmala Sitharaman and the Indian Insolvency and Bankruptcy Board asking for their intervention to expedite RITL’s resolution process. The signatories – China Development Bank, Export Import Bank of China, Shubh Holdings Pte and SC Lowy Asset Management – accused RJio, controlled by Mukesh Ambani, of not implementing the resolution plan.
RITL owes these financial institutions a total of Rs 13,483 crore on its total debt of Rs 41,055 crore.
In March 2020, Reliance Projects and Properties Management Services, a subsidiary of RJio, won the RITL and UV Asset Reconstruction Company award for RCom.
However, the process came to a halt in November 2020, after State Bank of India, Union Bank of India and Indian Overseas Bank branded RITL a “fraudulent account” following a forensic audit .
RJio, who received NCLT approval for the deal in December 2020, insisted he required details of the cheating tag and its removal before entering into the deal. However, the lenders were of the view that the tag would be dropped once RJio finalized the acquisition.
Later in May 2021, Reliance Projects moved NCLT asking it to order the lenders to share the audit report, stating that calling the accounts fraudulent had not been disclosed before NCLT.
Financial institutions have also alleged that Reliance Projects is enjoying full use of the RITL towers at a significantly reduced price, resulting in losses to the creditors’ committee of Rs 30-40 crore per month for maintenance.