India's top court finds Anil Ambani guilty of contempt in RCom-Ericsson case (updated)

Swan Defence and Heavy Industries

20/02/2019 07:58

(Adds comments from Ericsson and analysts, plus share moves and
context)
    By Suchitra Mohanty and Rajendra Jadhav
    NEW DELHI/MUMBAI, Feb 20 (Reuters) - India's Supreme Court
on Wednesday found Anil Ambani, chairman of debt-laden Reliance
Communications (RCom)  RLCM.NS , guilty of contempt of court for
wilfully failing to pay 5.5 billion rupees ($77.29 million) to
telecom equipment maker Ericsson  ERICb.ST . 
    The court ordered the billionaire and two RCom directors to
pay 4.5 billion rupees to Ericsson within four weeks or risk a
three-month jail term, according to a ruling from a two-member
bench headed by Supreme Court judge Rohinton Fali Nariman.
    RCom previously deposited more than 1 billion rupees with
the court.
    In a statement, the Indian telco said it respected the
ruling and "shall comply with the same".
    An Ericsson spokeswoman said the firm welcomed the ruling
and looked forward to RCom's compliance.  
    The Swedish firm signed a deal in 2014 to manage and operate
RCom's network and last year approached the court over the
unpaid dues.
    The court asked RCom to repay the dues by Dec. 15, a
deadline the company missed.
    RCom has struggled for cash partly a result of a price war
triggered by the market entrance of Reliance Jio Infocomm
 RELIB.UL , controlled by Anil's elder brother and Asia's
richest man, Mukesh Ambani.
    Earlier this month, RCom told the court that a deal to sell
fibre and tower assets to Reliance Jio failed, prompting RCom to
turn to bankruptcy courts for debt resolution and hence was not
in a position to pay the dues.  urn:newsml:reuters.com:*:nL3N1ZW4FZ  urn:newsml:reuters.com:*:nL3N1T14A0
    RCom owed banks $7 billion as of March 2017, when it last
made its debt level public. It also owes money to telecom
equipment vendors.
    "It will be very difficult for RCom to meet the ordered
payment and group companies might be utilised to pay the dues
through inter-corporate loans," said Sameer Kalra, equity
research analyst and founder of Target Investing.
    "This puts risk on group companies as well and might result
in the delay in the sale of stakes in other companies," he said.
    After the ruling, shares fell sharply in Anil
Ambani-controlled companies such as Reliance Capital  RLCP.NS ,
Reliance Infrastructure  RLIN.NS , Reliance Power  RPOL.NS ,
Reliance Naval and Engineering  RELV.NS , Reliance Home Finance
 RLIC.NS  and Reliance Nippon Life Asset Management  RELL.NS .
    ($1 = 71.1590 Indian rupees)

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India's RCom goes to bankruptcy court to resolve debt burden   
 urn:newsml:reuters.com:*:nL3N1ZW4FZ
India's RCom plans $2.68 bln asset sale to Jio, Brookfield in
next few weeks     urn:newsml:reuters.com:*:nL3N1T14A0
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Suchitra Mohanty in NEW DELHI and Rajendra Jadhav
in MUMBAI; Additional reporting by Promit Mukherjee; Editing by
Euan Rocha and Christopher Cushing)
 ((rajendra.jadhav@thomsonreuters.com; +91-22-6180-7153 ;
Reuters Messaging:
rajendra.jadhav.thomsonreuters.com@reuters.net))