RCom or Reliance Communications is not doing very well, but the shares of RCom, headed by Mr. Anil Ambani, saw an increase to almost 32% on Tuesday after the company announced another debt revival plan, which claims full debt resolution by March 2018. The deal is slated to bring relief to RCom which is reeling under huge debt of around Rs 45,000 crore.
The announcement comes on the 85th birth anniversary of Reliance Group founder Dhirubhai Ambani.
In three trading sessions, the stock zoomed almost 90 per cent, adding Rs 4,052.09 crore to its market valuation. "These assets are strategic in nature and are expected to contribute significantly to the large-scale roll-out of wireless and fiber-to-home (FTH) and enterprise services by Jio", the elder Ambani's company said.
The deal involves 122.4 MHz of fourth-generation spectrum, more than 43,000 towers, an optic fibre network of 1,78,000 route kilometres and 248 media convergence nodes.
Jio to Buy Reliance Communication Assets, Telecom Sector Consolidates Further
The transaction, subject to approval from lenders and other authorities, is expected to be completed in a phased manner between January and March 2018.
After the transactions, RCom is expected to gain from the sale, the proceeds of which will be used for the company's debt reduction. Jio will acquire all the assets without any previous liabilities attached to them. "The consideration is payable at completion and is subject to adjustments as specified in the agreement", Jio said. While it has sold a big portion of its assets, RCom still has some assets left that it hopes to build on, and perhaps monetise going forward.
RJio emerged as the highest bidder in the two-stage bidding process conducted under the supervision of a high-powered bid evaluation committee, comprising experts from banking, telecom and law.
Both the parties are bound by confidentiality obligations and will make further disclosure at the appropriate time.
Khaitan & Co and USA firm Davis Polk & Wardwell are understood to have also advised Jio.More news: Guggenheim Raises Tesla Inc (TSLA) Price Target to $380.00