RCom has paid Rs 550 crore to Ericsson as per the directions of the Supreme Court, confirmed the company spokesperson. Anil Ambani thanked his family for the financial support.
Read more: https://t.co/btp8xj5rV4 pic.twitter.com/RNbqmFX6Lg(Bloomberg) -- Asia's richest man Mukesh Ambani has helped his younger brother avert a stint in jail, stepping in to make an $80 million payment for his sibling whose telecom-to-infrastructure empire is struggling with debt.
The embattled former billionaire, Anil Ambani, thanked his brother Mukesh and sister-in-law after Anil's Reliance Communications Ltd. completed the required 5.5 billion rupee ($80 million) payment to a local unit of Ericsson AB for past maintenance services provided to his group. Repeated failures to pay and Anil's personal guarantee landed him in trouble in February, with India's top court giving him a month's notice to comply or face prison.
The last-minute twist shows family ties appear to have won out despite the brothers' fraught relationship over more than a decade. The scions of one of India's richest families have feuded over control of an empire left behind by their father. After Mukesh and Anil carved up the conglomerate, the older brother's oil and petrochemicals business flourished, while Anil's businesses ranging from telecommunications to power and infrastructure strained under massive debt. He has fended off creditors in multiple court cases.
The younger brother's net worth has shrunk to about $300 million from at least $31 billion in 2008 based on the current foreign-exchange rate, according to data compiled by Bloomberg. His stunning fall stands in contrast to the success of Mukesh, whose net worth is $54.3 billion and has increased $10 billion this year alone, according to the Bloomberg Billionaires Index.
Threat of Jail Caps a Long Fall for Billionaire Anil Ambani
Shares of RCom, as Anil's telecommunications carrier is known, surged 10 percent as of 9:15 a.m. in Mumbai following the payment. Reliance Power Ltd. shares gained as much as 8.6 percent, while Reliance Infrastructure Ltd. jumped 8.2 percent and Reliance Capital Ltd. gained almost 6 percent.
The decline in Anil's wealth ranks among the largest and fastest implosions in modern history, ranking alongside the reported $70 billion loss Japan's Masayoshi Son suffered during the dot-com crash after his SoftBank Group Corp.'s stock tumbled.
Brazil's Eike Batista was worth more than $30 billion at the start of the decade, according to the index. But his commodities and logistics empire evaporated under a mountain of debt and insider trading investigations. Batista gained the rare distinction of “negative billionaire” in 2015 when his net worth sank to more than $1 billion in debt.
The bailout money was an outright grant from Anil's elder brother, the Times of India reported, citing a person working for Anil's group.
Timely Support
Thanking Mukesh and his wife Nita Ambani, Anil said he and his family were “grateful we have moved beyond the past, and are deeply grateful and touched with this gesture” and “timely support,” according to a statement issued by RCom.
RCom stock plummeted 60 percent in 2018 as Anil struggled to close a 2017 deal to sell spectrum, signal towers and fiber to Reliance Jio Infocomm Ltd., a new service provider controlled by Mukesh, for 173 billion rupees.
RCom said Monday that the two companies have mutually agreed to terminate the pact, adding RCom is committed to “a comprehensive resolution” of overall debt through India's National Company Law Tribunal.
As regulations hindered Anil's biggest deal, creditors such as Ericsson began demanding past dues. The Swedish equipment maker's relentless legal pursuit led to a settlement under which RCom was to pay half of the past claims, or 5.5 billion rupees -- an offer backed by a personal guarantee from Anil.
Take a Bow, Ericsson. And India, Take a Lesson: Andy Mukherjee
Failure to keep this promise after a personal guarantee from Anil saw the situation escalate into a contempt case, with the court eventually setting the payment deadline.
The threat of a prison term if Anil didn't make the payment also came as a rare warning to some of India's richest borrowers whose firms have turned defaulters over the past few years. The nation's policy makers and courts have been cracking down on delinquency to help banks saddled with the world's worst bad-loan ratio.
The Ambani brothers used to serve as executives at their father Dhirubhai Ambani's company. In 2005, three years after their father's death, the pair agreed to split the empire into two. Anil got newer businesses such as telecommunications, power generation and financial services.
But since then, Mukesh has also re-entered India's now lucrative telecommunications sector with the creation of Reliance Jio Infocomm. His nationwide 4G network, which debuted with free services in 2016, has disrupted the industry, forcing rivals including RCom to bleed, merge or exit the business.
--With assistance from Tom Metcalf, Ronojoy Mazumdar, Arijit Ghosh and Abhay Singh.
To contact the reporters on this story: Upmanyu Trivedi in New Delhi at utrivedi2@bloomberg.net;Pei Yi Mak in Hong Kong at pmak17@bloomberg.net
To contact the editors responsible for this story: Sam Nagarajan at samnagarajan@bloomberg.net, ;Pierre Paulden at ppaulden@bloomberg.net, Bhuma Shrivastava
©2019 Bloomberg L.P.
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This Article is From Mar 20, 2019
