RComm dares RIL to go legal

RComm dares RIL to go legal
-By Corporate Bureau
A day after Mukesh Ambani-led Reliance Industries Ltd (RIL) advised South African telecom giant MTN to back-off from negotiations with Reliance Communications (Rcomm), the latter in a sharply worded letter has replied that in case RIL pursues a legal suit, RComm will vigorously defend itself and claim legal damages.
According to RComm sources, "The tone of the letter clearly indicates that it is part of a malafide design, with no substance, to simply try and disrupt talks between Rcomm and MTN, by raising the false bogey of litigation and damages".
The official added that RIL's action in sending the copies of the letter to a large number of bankers and intermediaries, without communicating with Rcomm first, further reflects its ulterior and malafide intentions.
Meanwhile, MTN has said its tie-up talks with RComm were still on. "As far as we are concerned, we have a 45-day exclusive talks agreement with Reliance Communications and nothing has really changed from our statement on May 26," MTN spokesperson Nozipho January-Bardill told the media in Johannesberg.
On its part, RIL said it had in good faith informed ADAG and MTN Group over the agreement on Reliance Communications. "RIL has in good faith notified both Anil Dhirubhai Ambani Group and MTN group of the stipulations contained in an agreement, the validity of which has never been questioned so far by ADAG," a Reliance Industries spokesman reportedly said when asked for reaction to the RComm statement.
However, RComm sources say the company has replied to RIL's claim as "legally and factually untenable, baseless, and misconceived".
"It was surprising that without knowing the contours of a possible transaction between RComm and MTN, RIL has jumped to a baseless conclusion that the same is covered by the alleged agreement," the sources added. RComm, the flagship company of the Anil Ambani led ADAG has been in talks with MTN, since the latter's talks with the country's largest service provider, Bharti Airtel collapsed. According to the latest reports, the structure being thrashed out by ADAG was that Anil Ambani swaps two-thirds of his 66% equity in RComm with 35% shareholding in MTN. Anil Ambani has also proposed an additional payment of $4-5 billion. This would make him the single largest shareholder in the resultant entity.
On Thursday, RIL, the country's largest private sector company, issued a legally worded letter to MTN and all the banks and other financial institutions involved warning them that it had "a right of first refusal in respect of transfer of shares of Reliance Communications Limited by the Reliance Anil Dhirubhai Ambani Group."
RIL told MTN that it has notified ADAG that it would adopt legal proceedings against them (ADAG) to enforce its rights in the Bombay High Court and would also add MTN as one of the defendants.
Citing an agreement between the brothers which was signed on January 12, 2006, RIL sent the copies of letter to almost all the involved parties except RComm to whom the letter was sent a day later. The claim by RIL was seen by many a move that would only further escalate the tension between the two brothers, whose public spat three years ago had kicked up much debate on corporate ethics and the need to settle family issues amicably in the interest of shareholders.