Reliance Communications, which had entered into a non-binding agreement to sell its telecom towers to two private equity firms, has extended the negotiations till the end of the month.
The extension comes a day ahead of January 15, deadline for the exclusive agreement. A formal announcement of the same is expected soon, another source said.
The discussions are being extended as the parties are yet to reach a conclusive settlement, multiple sources close to the development told
“The firms have sought more time to complete the due diligence and reach a conclusive settlement. The companies are invoking a clause in the agreement that says the negotiations could be extended if both the parties agree to it,” one of the sources said, declining to identified before a formal announcement. RCom declined to comment. On December 4, 2105, RCom had signed non-binding agreements with private equity firms Tillman Global Holdings and TPG Asia to sell its tower assets. Separately, the firms were also evaluating to acquire RCom’s nationwide inter- and intra-city optical fibre assets.
Together the transactions were expected to fetch about ₹30,000 crore, all of which were to be used to pare RCom’s debt, which was at about ₹ 40,000 crore.
Further, RCom was also expecting to reduce the financing cost of the debt to about ₹600 crore from ₹3,500 crore. The tower assets were to be spun out of the company into a Special Purpose Vehicle (SPV), which under the agreement was to be completely owned by Tillman and TPG.
The transaction is subject to final due diligence, definitive documentation, applicable regulatory and other approvals and certain other terms and conditions, RCom had said, adding, “there can be no certainty that a transaction will result”.
RCom has been trying to sell off the venture, unsuccessfully for sometime now. This could probably the second or third time RCom was looking to sell off its tower business. Earlier in 2010, the company had entered into an agreement to sell tower business to GTL Infrastructure, but was called off later. Later, the company was believed to be in a series of talks with a number of private equity companies — including Blackstone and Carlyle players — over a period to sell off the venture.
Gets bourses’ nod Separately, RCom in a regulatory filing said that it received an observation letter (approval to proceed) from stock exchanges for its proposed takeover of Sistema JSFC’s India telecommunications business. RCom got letters from both BSE and National Stock Exchange of India for its proposed acquisition.
Sistema JSFC’s is a publicly-traded diversified holding company in Russia and the Commonwealth of Independent States (CIS).
On November 2, RCom had entered into an agreement to takeover Sistema Shyam TeleServices Ltd, which provides telecom services under the brand name, MTS. As per the deal, SSTL will hold about 10 per cent stake in RCom and pay off its debt before the closure of the deal.
“The company and SSTL are proceeding to file necessary application with the Bombay High Court and Rajasthan High Court, respectively, for approval of the scheme,” it added.
Shares in RCom closed down 1.14 per cent at ₹77.25 on weak BSE, which ended down 0.33 per cent on Thursday.