Eric­s­son files in­sol­vency case against RCom

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ERIC­S­SON’S In­dian sub­sidiary has filed in­sol­vency pe­ti­tions against Re­liance Com­mu­ni­ca­tions and two of its com­pa­nies to re­cover un­paid dues, the mo­bile op­er­a­tor said in a stock ex­change fil­ing on Wed­nes­day. The Swedish tele­coms equip­ment maker, which signed a seven-year deal in 2014 to op­er­ate and man­age Re­liance Com­mu­ni­ca­tions’ na­tion­wide net­work, is seek­ing a to­tal of Rs 11.55 bil­lion ($180 mil­lion) from the three com­pa­nies, the fil­ing said.

Re­liance Com­mu­ni­ca­tions said it planned to chal­lenge the in­sol­vency pe­ti­tions.

ERIC­S­SON’S In­dian sub­sidiary has filed in­sol­vency pe­ti­tions against Re­liance Com­mu­ni­ca­tions and two of its com­pa­nies to re­cover un­paid dues, the In­dian mo­bile op­er­a­tor said in a stock ex­change fil­ing on Wed­nes­day.

The Swedish tele­coms equip­ment maker, which signed a seven-year deal in 2014 to op­er­ate and man­age Re­liance Com­mu­ni­ca­tions’ na­tion­wide net­work, is seek­ing a to­tal of Rs 11.55 bil­lion ($180 mil­lion) from the three com­pa­nies, the fil­ing said.

Re­liance Com­mu­ni­ca­tions said it planned to chal­lenge the in­sol­vency pe­ti­tions. The fil­ing said the Eric­s­son case would go be­fore the Na­tional Com­pany Law Tri­bunal, the des­ig­nated court for bank­ruptcy cases in In­dia, on Septem­ber 26. “Eric­s­son has done this as a last re­sort in or­der to re­solve an is­sue re­gard­ing debt that Re­liance owes to Eric­s­son for ser­vices pro­vided un­der a con­tract. As the le­gal process is on­go­ing, we don’t have any fur­ther com­ments at this point,” the Swedish com­pany said.

The pe­ti­tions come as the In­dian phone com­pany con­trolled by bil­lion­aire Anil Am­bani races against time to seal deals to sell a stake in its tower as­sets to Canada’s Brook­field and to merge its mo­bile ser­vices busi­ness with ri­val Air­cel. Re­liance Com­mu­ni­ca­tions re­ported its third quar­terly loss in a row last month and is try­ing to find ways to cut its debt af­ter cred­i­tors gave it a re­prieve on loan re­pay­ments un­til the end of 2017. The Brook­field and Air­cel deals are ex­pected to re­duce its debt bur­den by 250 bil­lion ru­pees. Am­bani said at the time of the loan re­prieve that he ex­pected to com­plete the deals by Septem­ber. The com­pany’s losses are, in part, a re­sult of com­pe­ti­tion from free voice and cut-price data plans of­fered by Re­liance Jio In­fo­comm, the tele­com start-up backed by Am­bani’s elder brother and In­dia’s rich­est man Mukesh Am­bani.

Eric­s­son is aim­ing to re­cover Rs 4.91 bil­lion from Re­liance Com­mu­ni­ca­tions, 5.35 bil­lion from Re­liance In­fratel and Rs 1.29 bil­lion from Re­liance Tele­com, the fil­ing said.

Re­liance Com­mu­ni­ca­tions shares closed 4 per­cent lower on Wed­nes­day be­fore the fil­ing was re­leased, af­ter lo­cal me­dia re­ports said Eric­s­son had filed an in­sol­vency plea.

In­dia last year re­vamped its bank­ruptcy laws to help cut a record $150 bil­lion in im­paired bank loans. The rules al­low fi­nan­cial as well as busi­ness cred­i­tors to trig­ger bank­ruptcy pro­ceed­ings against a com­pany which has de­faulted on pay­ments.

Eric­s­son has done this as a last re­sort in or­der to re­solve an is­sue re­gard­ing debt that Re­liance owes to it

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