Aircel is close to exiting bankruptcy proceedings, with the court-appointed manager picking UV Asset Reconstruction Company Ltd (UVARCL) to take over the telecom company, including its debt of Rs 20,000 crore, people with knowledge of the matter said.
Deloitte, which is managing the debt resolution process of the now-defunct telecom operator, presented the asset reconstruction firm as its choice before its committee of creditors last week, one of the persons said. “More than 50-60 companies globally had been approached to bid for the operator’s assets and from there UVARCL was the final choice whose name has been sent to all the bankers,” the person said.
The lenders to Aircel, majority owned by Malaysia’s Maxis, include State Bank of India, China Development Bank (CDB), Bank of Baroda and Punjab National Bank. They will have a month to study the proposal. If a better proposal comes up during this time, that will also be presented to the bankers, another person said.
Under the Insolvency and Bankruptcy Code, approval of at least 66% of lenders, based on their share in the total debt, is needed for a proposal to pass. If lenders can’t agree on any offer, the assets will go into liquidation. If the proposal is approved, “the company (UVARCL) will take over the liabilities of Aircel, run a certain part of the operations and put up the rest for sale,” the second person said. The asset reconstruction firm may decide to keep the fibre business or work in the bulk messaging space and sell the rest, he added.
“We have no comment to offer at this stage,” UVARCL said in response to ET’s queries. Deloitte said it was “bound by confidentiality obligations” and “unable to comment on company specific matters”. Aircel, SBI, CDB, Bank of Baroda and Punjab National Bank didn’t respond to emails seeking comment.
Aircel, which ran mobile services across India and was particularly strong in the South, shut its services in March 2018 and voluntarily filed for bankruptcy, after coming under pressure due to brutal price competition in the sector and the burden of debt it took to acquire airwaves and fund expansion. The bankruptcy court, while admitting the pleas of Aircel and its Dishnet Wireless and Aircel Cellular units, noted that its enterprise business, along with the company’s spectrum, towers, fibre and other assets, was worth Rs 32,000 crore.
The company had previously made several efforts to raise funds to escape liquidation. It was reported that even Bharti Airtel and Reliance Jio Infocomm had put in bids for the assets.
The company also waged legal battles, mainly against the Department of Telecommunications (DoT) and some operators, to recover its dues from them. It managed to recover Rs 639 crore from Bharti Airtel and DoT. The company is still fighting a battle against Bharti Airtel in the Supreme court over Rs 112 crore that it claims the larger operator still owes it.
The company has about 1,500 employees on its payrolls. Last year, a team of employees managed to raise Rs 90 crore from vendors and clients who owed the company money. This, and infusion of Rs 95 crore in April last year by Maxis, then allowed it to clear employees’ salary arrears.