Aircel Ltd filed for voluntary insolvency back in February 2018 because of lack of liquidity and the ability to pay back the debt. It has finally found some help though. The Mumbai bench of National Company Law Tribunal (NCLT) has approved a resolution plan presented by UV Asset Reconstruction Company. The resolution plan is of Rs 6,630 crore and primarily focuses on getting money from zero-coupon optionally convertible debentures. However, the plan presented by UV ARC seemed more like a ‘liquidation or winding up’ plan than a resolution plan to the two-member bench of NCLT. Yet the plan was approved from the bench given that it is bound by Supreme Court’s decision which indicates not to interfere with the merits determined by the commercial decision being taken by the creditors committee. This news is first reported by Bloomberg.
Resolution Plan and Asset Monetisation
According to the resolution plan of UV ARC, it is looking to rebuild Aircel but this time as a low capex business and will sell all the assets which can be monetised. There is a Rs 58,760 crore loan over Aircel, for that UV ARC has proposed an amount of Rs 19,600 crore. Out of this Rs 19,600 crore, UV ARC will be paying of Rs 6,630 crore through the help of zero-coupon optionally convertible debentures which will be issued in the favour of financial creditors. The amount remaining will be automatically converted into 24% equity.
For the initial years, UV ARC will be holding 76% of the company while the 24% equity will be with the financial creditors. But after five years, the financial creditors could get hold of up to 74% of the company. All the payments to operational creditors, employees, and resolution costs will be cleared in priority to financial creditors.
From the sale of Aircel’s fiber lines, spectrum usage rights, real estate, and other assets, UV ARC expects a receipt of max Rs 1,500 crore. Lastly, UV ARC will try to raise funds by getting the money back for tax receivables worth Rs 390 crore and accumulated and unabsorbed depreciation worth Rs 450 crore.