Aircel RP seeks INR 3.5bn (USD 51.93m) bankruptcy financing

11 May 2018
 
Aircel Ltd's resolution professional is seeking to raise around INR 3.5bn (USD 51.93m) in so-called interim finance for the bankrupt Indian wireless network operator, according to three sources with knowledge of the matter.

The funds would enable the company to continue to operate its four functioning circles while resolution professional Vijaykumar V Iyer from Deloitte tries to attract a white knight, according to two of the sources.

Aircel – the Indian unit of Malaysia communication services provider Maxis Communications Bhd – intends to reduce but not completely shut down service in Punjab, Delhi, Mumbai and parts of West Bengal because otherwise the spectrum would need to be surrendered, business daily Hindu BusinessLine reported on 5 March. It already shut down services in six other circles in January 2018.

Aircel was admitted into bankruptcy on 12 March in response – unusually – to its own application. Citing "apprehension of suspension of telecom license [sic]…", the application requested urgent admission to free up INR 600m (USD 8.90m) in a trust and retention bank account frozen by lenders.

Resolution professional Iyer did not respond for comment.

Interim finance is super-senior secured debt scheduled to be repaid when a debtor exits the maximum 270-day bankruptcy resolution process. Despite the high yields and priority status, the financing structure has not attracted interest in part because the current law halts accrual once a company goes into liquidation, severely dampening expected returns, as reported.

A government advisory committee recommended that India’s bankruptcy code be revised to allow interest on interim finance to accrue for up to one year after liquidation. The potential change is reviving international interest in the priority funding structure, as reported.

Two Aircel subsidiaries – Aircel Cellular and Dishnet Wireless – were separately admitted into bankruptcy on 19 March, according to company announcements.

Aircel Ltd has around INR 188.10bn (USD 2.79bn) in admitted financial claims from 11 lenders, according to a list published by resolution professional Iyer. That includes INR 27.19bn (USD 403.44m) claims from China Development Bank, INR 5.37bn (USD 79.62m) from NORDIC Investment Bank, INR 5.03bn (USD 74.60m) from AB Svensk Exportkredit and INR 3.43bn (USD 50.90m) from Standard Chartered Bank.

by Pallavi Ail and Pranav Nambiar