Aircel files for bankruptcy; SBI, others to bear brunt
NEW DELHI: Telecom operator Aircel on Wednesday said it has filed for bankruptcy as the company has been facing “troubled times” in “highly financially stressed” industry.
The Malaysian owned Maxis company has a debt of over Rs 16,000 crore taken from a consortium of banks led by State Bank of India.
Indian lenders exposure stands at around Rs 12,000 crore. SBI has the lion’s share of Aircel debt at over Rs 5,000 crore. SBI may provide for Rs 750-800 crore in Q3 on Aircel account. Aircel bankruptcy will also hit other public sector banks like PNB, BOB, Canara Bank. Lender banks to provide for Rs 1,800 crore provision in Q3 on account of Aircel.
The company shutting down is expected to impact tower firms, vendors, distributors and 500 employees associated with the operator.
In a statement here, Aircel said that intense competition following the disruptive entry of a new player, legal and regulatory challenges, high level of unsustainable debt and increased losses had together caused significant “negative business and reputational impact” on the company.
“The Board of Directors of the Corporate Debtor on Wednesday announced that they have filed an application under Section 10 of the Insolvency and Bankruptcy Code 2016 for undertaking Corporate Insolvency Resolution Process for the respective companies: Aircel Cellular, Dishnet Wireless, Aircel Ltd,” the statement said.
Sources said that the filing was made in National Company Law Tribunal (NCLT) Mumbai.
The company statement also noted that efforts to merge wireless business with another operator did not yield any results and had ultimately lapsed in September 2017.
“Post detailed discussions with the financial lenders and shareholders; the company could not reach a consensus concerning the restructuring of its debt and funding. Despite these discussions and the invoking of a Strategic Debt Restructuring scheme in January 2018... no agreement could be reached,” Aircel said.
The company also said it believes that in the current circumstances, resolution process under the Insolvency and Bankruptcy Code is an “appropriate recourse”.
“The Company would like to emphasise that CIRP is not a proceeding for liquidation, rather is a process to find best possible resolution for the current situation and that would be in the best interest of everyone (vendors, distributors, employees, etc.) to protect and preserve the value of the company and manage the operations,” it added.
Aircel said it would strive to provide uninterrupted service connectivity to its customers and sought their support in the “current difficult period”.