Anil Ambani’s led Reliance Communication Enterprises(RCE) has pledged 4.52% of its holding to IndusInd Bank which values up to Rs 12.50 crore. Reliance Communications was the major business of Anil Ambani until it suffered a considerable downfall in the promoters stake decline. The main reason for the decline was due to the invocation of pledged shares by the lenders.
The actual shareholding of Reliance Communications Enterprise(RCE) in RCom prior to pledging the shares was 17.74%, which amounts to 49.06 crore shares. In January, it had pledged 4.85% ( 12 crore shares ) stake. This brings RCE’s current shareholding to 9.37% of total share capital which amounts to Rs 25.90 crore. The 4.85% stake pledged were jointly owned by the promoters i.e Ambani, his family members and also RCom’s group entities.
On 1st February, 2019 when RCom filed for bankruptcy, the sale of pledged shares have been growing since then. The Supreme Court had held Ambani in contempt for not paying the dues of the Swedish telecom equipment maker Ericsson. Ericsson provided services to Reliance Infratel Limited (RITL), Reliance Telecom Limited (RTL) and Reliance Communications Limited (RCom). All the three companies work in different segments i.e towers, fixed line and broadband and wireless voice and data respectively.
The total claim of Ericsson is approximately Rs 1000 crore against the three entities. Ericsson were the unsecured creditors of RCom whereas according to the Insolvency and Bankruptcy code the secured financial creditors have the first right over the assets of the debtor company. Therefore Ericsson realized that the only way it can recover its dues and survive was by avoiding insolvency. But RCom was quick to settle bank’s dues and declared insolvency.
The problem here for Ericsson was that the Committee of Creditors (COC) was comprised of the financial creditors who in turn had the right to call the shots upon any sale of assets. Ericsson was vulnerable in this case and the company took the decision to terminate their agreement with RCom which means termination of services to the three entities. RCom later filed a special leave petition in the apex court asking to prevent any challenge to its asset sale. Anil Ambani cleared the dues of Ericsson with the help of his brother Mukesh Ambani.
Reliance Communications Ltd.’s shares were trading at Rs 5, down by 4.76% as on 25th March, 2019 on the NSE.