Troubled Indian operator Reliance Communications (RCom) and Ericsson moved closer to reaching a settlement over the operator’s outstanding debt, which would allow it to exit bankruptcy proceedings and sell its wireless assets to Reliance Jio in order to pay off debt, The Economist Times (ET) reported.
The two companies, after lengthy negotiations, reportedly are discussing a deal of between INR6 billion and INR7 billion ($89 million and $104 million), with Ericsson lowering the amount it needs to resolve the dispute. Ericsson earlier told the court it would need at least INR9.8 billion, despite previously claiming RCom owes it about INR16 billion, ET said.
Both companies will submit their settlement offers to the National Company Law Appellate Tribunal today (30 May). A source told ET Ericsson may require a bank guarantee for payment.
A settlement would allow RCom to exit debt resolution proceedings ordered in mid-May by the National Company Law Tribunal (NCLT) and move ahead with the sale of assets to Jio.
Two weeks ago RCom said it was in talks with Ericsson to sort out a debt of $150 million outside of bankruptcy court.
In mid-May the NCLT accepted Ericsson’s request for RCom to face bankruptcy proceedings over the debt, which put into jeopardy its plans to sell most of its wireless assets to Jio.
RCom’s shareholders in February approved a plan to sell its wireless assets to Jio, in a move which will cut the struggling operator’s debt load by INR250 billion.