Mukesh Ambani’s Reliance Jio on Thursday announced the signing of an agreement to acquire specified assets of brother Anil Ambani’s Reliance Communications (RCom) which is reeling under a debt of Rs 45,000 crore.
As part of the deal, Reliance Jio will acquire spectrum, tower, optical fibre network and other wireless assets of RCom.
Reliance Jio will acquire all the assets without any previous liabilities attached to them.
The transaction is subject to approvals and is expected to close between January and March 2018.
The deal comes just two days after RCom entered into a new deal with the lenders, where Rs 40,000 crore will be raised through sale of assets, thereby avoiding a potential takeover by 35 local and foreign banks.
While the size of the deal has not been disclosed, banking experts have estimated the transaction value to be Rs 24,000-25,000 crore.
“The RJio deal consideration comprises primarily of cash payment and includes transfer of deferred spectrum instalments payable to the Department of Telecommunication (DoT). The company will utilise the proceeds of the monetisation of this cash deal solely for pre-payment of debt to its lenders,” RCom said in a statement.
“An asset monetisation process for RCOM assets was mandated by the lenders of RCOM, who appointed SBI Capital Markets Limited to run the process. The process is supervised by an independent group of distinguished industry experts. Reliance Jio emerged as the successful bidder in the two-stage bidding process,” Reliance Jio said in a statement.
Reliance Jio is being advised by Goldman Sachs, Citigroup Global Markets, JM Financial Private Limited, Davis Polk & Wardwell LLP, Cyril Amarchand Mangaldas, Khaitan & Co and Ernst & Young on this transaction.
“Following the agreement, Reliance Jio or its nominees will acquire assets under four categories – Towers, Optic Fiber Cable Network (“OFC”), Spectrum and Media Convergence Nodes (“MCN”) from RCOM and its affiliates. These assets are strategic in nature and are expected to contribute significantly to the large scale roll-out of wireless and Fiber to Home and Enterprise services by Reliance Jio,” the statement added.