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RCom lenders mulls extending bank guarantees to save spectrum

SBI writes to telecom secretary to not cancel spectrum allocation to the telco

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State Bank of India (SBI) chairman Rajnish Kumar has written to the Union telecom secretary Aruna Sundararajan not to cancel the spectrum licence of Anil Ambani owned Reliance Communications and Reliance Telecom, saying it will jeopardise the debt recovery programme of the banks led by SBI. The company had defaulted on Rs 45,000 of loans to a consortium of 22 banks.

In the letter, a copy of which is with DNA Money, Kumar assured the telecom secretary, saying that banks are examining the possibility to reissue or extend the bank guarantees, subject to internal approvals of all banks in the consortium.

Kumar was not available for comment and did not respond to a text message.

After the company defaulted on its loans, the lenders had initiated a debt resolution and asset monetisation plans to recover the dues. "Spectrum along with other telecom infrastructure and the assets of the company were proposed to be sold to Reliance Jio Infocom. The sale proceeds were to be utilised to clear the dues Rs 45,000 crore of lenders. This process of sale of spectrum and other telecom assets was initiated and monitored by lenders since the inception of the asset monetisation plan. The asset sale was carried out under the chairmanship of former RBI deputy governor S S Mundra and other legal experts," Kumar said in the letter.

RCom had recently approached TDSAT against the government's showcause notice on spectrum and license cancellation. The company had told TDSAT that the Rs 774 crore payment demanded by DoT is already paid to the government through encashment of previous bank guarantees. It said now RCom needed to renew the encashed bank guarantees, which will be payable only in March 2019. The claim on RCom of Rs 774 crore is merely to replenish the encashed bank guarantees.

Kumar said in the letter, "We understand from Reliance Communications and Reliance Telecom that the Department of Telecommunications appears to be contemplating revocation of spectrum allotted to both the companies due to non-submission of bank guarantees that is not submitted to by the companies on expiry of earlier BGs given by them while bidding and securing licence for the allocated spectrum."

He said that all assets of the companies are secured by charge or hypothecation or mortgage or assignment of assets of above companies in favour of the consortium of banks.

DoT has allocated the right to use a certain specified spectrum to the above companies in 2013 and 2015, respectively. Subsequently, tripartite agreements were executed between Reliance Communications and Reliance Telecom as the licensees and DoT as the licensor and lenders represented by the lender's agent in relation to the assignment by way of security of such telecom licences.

FRAGILE PROCESS

  • After the company defaulted on its loans, the lenders had initiated a debt resolution and asset monetisation plans to recover the dues
     
  • Spectrum along with other telecom infrastructure and the assets of the company were proposed to be sold to Reliance Jio Infocom
     
  • The sale proceeds were to be utilised to clear the dues Rs 45,000 crore of lenders
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