Aircel filed for bankruptcy in Mumbai branch of National Company Law Tribunal (NCLT)
Highlights
- Aircel files for bankruptcy in National Company Law Tribunal, Mumbai
- Malaysian-owned Maxis has debt of over Rs 16,000 crore
- Debt owed to consortium of banks led by State Bank of India
Billionaire T Ananda Krishnan's Aircel has filed for bankruptcy, pointing to its unsustainable debt and intense competition in the telecom sector due to what it called the "disruptive entry of a new player". The company filed the request on Wednesday in the Mumbai branch of National Company Law Tribunal (NCLT), the bankruptcy and insolvency resolution court.
A company statement said the board of directors acknowledged that the company faces troubled times in a highly financial stressed industry, intense competition, increased losses and a high level of unsustainable stress.
"This has caused significant negative business and reputational impact on the company," the statement said.
Reliance Jio that launched free voice and cut-price data plans in 2016 had forced smaller operators to exit the crowded and competitive telecoms market. Bigger players such as Idea Cellular and Vodafone Group Plc's Indian unit are merging to stave off competition.
Wednesday's bankruptcy request comes weeks after the January 19 meeting with lenders where the company's promoters were asked to invest at least a billion dollars to enable the company to meet its financial obligations.
"Post-detailed discussions with the financial lenders and shareholders, the company could not reach consensus with respect to restructuring of its debt and funding," Aircel said in a statement.
The Malaysian-owned Maxis company has a debt of over 16,000 crores taken from a consortium of banks led by State Bank of India.
As a result of the bankruptcy filing, Malaysian tycoon T Ananda Krishnan who backed Aircel was poised to lose a total of about $7 billion, marking his biggest ever hit on a soured investment, a Bloomberg report said, citing people familiar with the matter.
Maxis, a holding company for some of Krishnan's telecom ventures, has made about $3.4 billion of shareholder advances to Aircel that it won't be able recoup, the report said.
Maxis also stand to lose around $1.2 billion it injected in return for common stock and subscription to $1.6 billion of redeemable preference shares in the Indian mobile carrier, the report said.