Reliance Communications Starts Exclusive Discussions With Mtn

[Honest 836]

RCom to retaliate if RIL goes legal on MTN deal

14 Jun, 2008, 1743 hrs IST, PTI

NEW DELHI: Ambani siblings' war intensified on Saturday with the younger Anil's group warning to retaliate in case Mukesh-led Reliance Industries goes legal with its claim on the potential multi-billion dollar amalgamation deal that the former is pursuing with South African telecom giant MTN.

In a strongly worded reply to RIL's threat to go legal against ADAG to enforce its right of first refusal, Anil-led Reliance Communications said, "If RIL choses to take any legal action the same will be vigorously defended by R-COM, and R-COM would claim cost and damages from RIL."

The battle between the two richest Indians had flared up after RIL wrote to MTN and ADAG, copies of which were sent to the bankers, cautioning that the amalgamation deal through reverse swap would tantamount to breach of RIL's first right of refusal to acquire a controlling stake in R-COM.

[Honest 836]

MTN terms RCom's threat as false bogey of litigation, damages

14 Jun, 2008, 1803 hrs IST, PTI

Asked if South African major saw any legal hurdles in deal with RCOM and if it was seeking legal opinion on RIL's claims, MTN Group's spokesperson Nozipho January-Bardill told the media, "I cannot comment on any of your questions. MTN's last SENS (regulatory) announcement remains as is."

The deal is estimated to create a combined entity worth a size of about 70 billion dollars and could have operating profits higher than RIL, India's biggest private sector firm.

Following up its strong criticism of RIL's communication, ADA group company wrote a letter to RIL, saying, "there is no question of taking note of any alleged rights on RIL's part... Its (RIL's) claim is legally and factually untenable, baseless and misconceived, to be dismissed with contempt it deserves."

Though its spokesperson said that there was no change in RCOM's stand from what was stated on Friday the company sources said, "The use of threatening and coercive language by RIL, India's largest private company, with MTN, a globally respected telecom major, is very unfortunate."

They said "RIL's action in sending copies of the letter to a large number of banks and intermediaries without even first communicating with RCOM reflects its ulterior and mala fide motives."

Terming RIL's threats as "false bogey of litigation and damages," the RCOM sources expressed surprise that without knowing of the nature of a possible transaction between RCOM and MTN, how RIL has jumped to the conclusion that it would be covered by the alleged agreement of January 12, 2006.

In its letter to MTN, RIL had said that as per the said agreement it has "a right of first refusal in respect of tranfer of shares of Reliance Communications Limited by the Reliance Anil Dhirubhai Ambani Group."

[Honest 836]

Don't confuse between settlements and pacts: Mukesh to Anil

14 Jun, 2008, 2201 hrs IST, PTI

NEW DELHI: The controversy between Ambani siblings over division in Reliance empire on Saturday flared up with Mukesh Ambani's side cautioning Anil's camp not to create confusion between the family settlement and agreements signed between the two groups.

Amid battle of the two groups over a potential 70-billion dollar deal between Anil-led Reliance Comm and South African telecom giant MTN, sources close to Mukesh-led RIL said that enforceability of agreements signed in 2006 has been asserted with "full sense of restraint and responsibility" and RIL expects all parties to maintain same level of responsibility.

RIL sources also questioned the claims of the other camp that RCOM had responded to the contentious communication from RIL about the deal.

RIL has not received any communication from Anil Ambani group, sources said, questioning the claims made by RCOM.

"RIL in its communication has merely asserted its enforceable rights and has appraised all parties concerned. It has done so with full sense of restraint and responsibility and expects all parties to maintain the same level of responsibility," they added.

"The family arrangement of June 2005 is distinct and different from the non-competition agreement dated January 12 2006, and the gas master supply agreement, to both of which RIL was a signatory," they added.

The sources further said that these two agreements, executed pursuant to the sanctioned scheme of demerger, are not to be confused with the family MOU as these are distinct and separate and contain distinct rights and obligations.

[dkaile 1,051]

^^^^

My God, Itne lambe lambe posts. Main to dekh kar hi thak gaya, padne ki baat to bahut door ki...

[Honest 836]

Anil strikes back at Mukesh over MTN letter

15 Jun, 2008, 0502 hrs IST

MUMBAI: The Ambani brothers are engaged in a war of letters, once again. Anil Ambani’s Reliance Communications (RCOM) on Saturday sent a strongly-worded letter to Mukesh Ambani’s flagship Reliance Industries (RIL) threatening to claim costs and damages from RIL if it takes any legal action to enforce its claimed first right of refusal.

This round of the battle was began by RIL which on Thursday sent a letter to the South African telco MTN, which is in merger talks with RCOM, claiming that it enjoys the first right of refusal in case of sale of RCOM. RIL’s claim was based on a disputed agreement with three entities of the Anil Ambani group in January 2006. RIL sent the same letter to RCOM on Friday.

In its letter dated Saturday (June 14), RCOM told RIL that “the tone of the letter clearly indicates that it is part of a mala fide design, with no substance, to simply try and disrupt talks between RCOM and MTN, by raising the false bogey of litigation and damages. The use of threatening and coercive language by RIL, India’s largest private company, with MTN, a globally respected telecom major, is very unfortunate.”

RCOM and MTN are engaged in reverse-merger talks which, if successful, would help Anil Ambani to emerge as the single largest shareholder of the Johannesburg-based company while RCOM will become the subsidiary of MTN. However, the exact details of the proposed deal are yet to be finalised. It is expected that both the parties may announce a definitive plan in early July.

RCOM also said: “It is surprising that without knowing the contours of a possible transaction between RCOM and MTN, RIL has jumped to a baseless conclusion that the same is covered by the alleged PACT dated January 12, 2006, which in any case was unilaterally signed only by RIL’s officials.”

The Ambani brothers parted ways in June 2005 after one of the prolonged and bitterest battles in the history of Corporate India. The January 2006 PACT was to implement the demerger of businesses between the brothers. However, Anil Ambani challenged parts of the PACT on the plea that the companies, which had signed the pact, were under the control of Mukesh and therefore the agreement was untenable. The matter is still sub-judice.

According to RCOM, RIL’s action in sending copies of the letter to a large number of banks and intermediaries without first communicating with RCOM further reflects its ulterior and malafide motives.

[Honest 836]

ADAG thrashes RIL's claim as unenforceable

15 Jun, 2008, 1826 hrs IST, PTI

NEW DELHI: Amid the ongoing war between the Ambani siblings, younger brother Anil's camp on Sunday thrashed Mukesh Ambani led Reliance Industries claim of rights of first refusal in former's Reliance Communication by quoting a decision of the Union Cabinet.

Asserting that Reliance Industries claim was not even incorporated in the Articles of the Association of Reliance Communications, the Anil Ambani group official said based on the legal opinion the Union Cabinet had taken the view that there could be no restriction on transfer of shares of a listed company.

A communication by RIL claiming its first right of refusal to buy a majority equity in RCom had triggered the latest round of fight in middle of Anil Ambani Group company's negotiation with South African telecom major MTN group for an estimated 70 billion dollar amalgamation deal.

[Honest 836]

MTN team slips into India as Ambani guns blaze

15 Jun, 2008, 1856 hrs IST, PTI

NEW DELHI: A team of South African telecom giant MTN's officials has quietly landed in India for talks with Reliance Communications on the deal, an issue on which RCOM head Anil Ambani and elder brother Mukesh have locked horns threatening legal recourse against each other.

"The MTN team is in India and talks for the deal with Reliance Communications are progressing," sources close to the development said.

The MTN spokesperson did not respond to the query if the group was also sending a team of legal experts in a day or two to look into the claims made by Reliance Industries on First right of refusal.

In a letter to MTN, RIL had warned that it would take legal recourse and claim damages if MTN became party to violation of the first right of refusal.

Meanwhile, sources close to the development said that a team comprising over six executives of MTN landed on Saturday in Mumbai, the head quarter of Reliance Communications, as part of due diligence, a process that could lead to the creation of one of the largest telecom entities in the world.

[ankurraheja 0]

Thanks for the updates...

I am afraid, this issue would make share of Reliance Communication a little volatile in tomorrow's market !

[Honest 836]

MTN calling: Ambanis gear up for a long battle

16 Jun, 2008, 0825 hrs IST

MUMBAI: The weekend saw no let-up in the latest round of the seemingly unending and relentless war between the Ambani brothers, with both sides readying their heaviest legal artillery. After the initial shock and awe of RIL's sudden intervention, Anil Dhirubhai Ambani Group (ADAG) officials have adopted an aggressive posture.

However, RIL has shown no signs of yielding, with company officials claiming that MTN would have to consider the legal implications of acquiring RCOM. Seemingly undeterred by the controversy, an MTN team arrived in Mumbai on Saturday to start due diligence on RCOM.

A senior ADAG executive told ET on Sunday that Reliance Industries (RIL) can make an open offer if they are keen on buying RCOM. The executive is involved in structuring the proposed $70 billion mega-merger deal between RCOM and South African telecom giant MTN.

"If they want, they can make an open offer to buy RCOM or go to court. They will not do so or go to court because they are not interested in buying RCOM; their only interest is to sabotage our efforts to create a global telecom giant stretching from Asia to the Middle East and Africa with a subscriber base of 116 million," said the executive.

"Besides, what is hurting RIL is that if the deal goes through, EBITDA of the combined RCOM and MTN for 2009 would be Rs 45,000 crore, 50% more than RIL's EBITDA of Rs 30,000 crore. Our deal is on track," said the executive.

When asked for comments on RIL making an open offer to buy RCOM or going to court to enforce its right of first refusal, RIL's official spokesperson declined to comment, saying RIL has not officially received any response from RCOM or MTN for its letter. "It's interesting that they have not responded to us even after 48 hours. As far as MTN is concerned, their board and all bankers involved will have to take note of concerns expressed by India's largest private sector company," an RIL source said.

In a statement issued to media on Friday, RIL had said: "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."

When asked if RCOM has received any communication from MTN seeking clarifications on RIL's letter, the RCOM executive said: "MTN was quick enough to respond to RIL's letter. Within a couple of hours, the MTN spokesperson had said that nothing has really changed and talks with RCOM were on as per the 45-day exclusive talks agreement." MTN officials could not be reached for their comments.

The issue came into the limelight after RIL wrote to MTN on Thursday threatening legal proceedings to enforce its claimed right of first refusal in the Bombay High Court, in which case MTN would also be one of the defendants.

RIL's letter to MTN was addressed to Cyril Ramaphosa,(non-executive chairman) and PF Nhelko (group president and CEO). The letter, a copy of which is available with ET said: "As you will note, we have already notified to ADAG that we shall adopt legal proceedings against them in the Bombay High Court, in which we shall necessarily add MTN as one of the defendants....Please note that any agreement of the nature contemplated above between MTN and ADAG will result in MTN procuring a breach of the agreement, which shall entitle RIL to make a claim for exemplary damages against MTN," said the letter.

The letter was written by RIL's company secretary K Sethuraman and copies of the letter were marked to the investment bankers involved in the deal such as Lombard Odier Darier & Cie, Newshelf664 (Pty) Ltd., Merrill Lynch South Africa (Pty) Ltd, Merrill Lynch & Co., Inc., Lazard Ltd and Deutsche Bank AG's offices in the UK and Germany.

Commenting on the letter, the ADAG executive said: "As far as RIL going to court is concerned, they may, but on what basis? On the basis of the January 12, 2006 agreement, which was unilaterally signed by RIL officials and which subsequently the Bombay High Court ruled as 'unfair and unjust' in October 2007?" The ADAG executive added that RIL had "jumped the gun" since no definitive agreement had been reached with MTN.

The crux of the younger Ambani's case is that the implementation of the MoU signed in July 2005 to execute the family settlement was done in a faulty manner. The MoU envisaged the creation of two groups, MDA and ADA. The MoU further said that the group companies would enter into various agreements such as right of first refusal, non-compete and so on.

RCOM officials allege that these agreements were, in fact, signed on January 12, 2006 when the future ADA companies (RCOM, Reliance Energy and Reliance Capital) were still part of the original Reliance Group controlled by Mukesh Ambani. They were handed over to ADA Group only in February 2006. They say that agreements should have been signed only after ADAG was created. Instead, Mukesh Ambani entities, ADAG claims, had signed agreements with each other, ignoring ADAG's interests.

The same legal issue has taken centrestage in ongoing proceedings in the Bombay High Court, though the dispute here relates to the ADAG's right to supply gas to its power plants. A single judge bench ruled that RIL could not sign binding gas supply agreements without first ensuring ADAG's rights. The case is now before a division bench. The Government of India has supported RIL's right to sign gas supply agreements, saying that this was in the national interest. The division bench has not delivered a final verdict. Whoever loses is sure to go to the Supreme Court.

If the RCOM-MTN case goes to court, then an opinion by the Attorney General of India relating to Balco divestment may also be of relevance. The AG had observed that any restriction on the free transfer of shares in an Indian public limited company, even if present in its Articles of Association, are illegal and unenforceable, as per section 111A of the Companies Act 1956. This was in the context of Sterlite's call option on the government's 49% stake in Balco. By analogy, RCOM officials reason that there can be no restriction on ADAG's right to sell its shares in RCOM. More so, since the right of first refusal is not part of RCOM's Articles of Association.

Commenting on the validity of the agreement, an RCOM spokesperson said: "RIL's reference to an agreement dated January 12, 2006, is misleading, as ADAG had written to RIL the very same day, and rejected the unilateral procedure adopted for finalising such agreements as being illegal. Further, these were never incorporated in the Articles of Association of ADAG companies."

But RIL sources rubbish these contentions. "The master agreement of January 2006 was approved by the RIL board, of which Anil Ambani was very much a part. The agreement gave birth to ADAG. Further, the non-compete clauses of the same agreement is often used by ADAG to challenge and block many MDA initiatives. The latest such challenge was the plan to set up power plants in Navi Mumbai and Maha Mumbai SEZs," a source said. "We get letters from them (ADAG) every two weeks on something or the other, but we keep quiet. How can they now repudiate the agreement?" the source said.

Perhaps its time for family matriarch Kokilaben to intervene once again.

[Honest 836]

Anil Ambani sets sight on more than 40 % stake in MTN

17 Jun, 2008, 1209 hrs IST

Until now it has been thought Ambani would limit himself to a 34.9 per cent stake in MTN, because if he went any higher he would be obliged under South African laws to make an offer to buy out the African company' other shareholders.

LONDON: Reliance Communications, the flagship company of the Anil Dhirubhai Ambani Group (ADAG), is keen to acquire more than 40 percent of South African telecom company MTN. Anil Ambani, chairman of Reliance Communications, is considering buying more than 40 per cent of MTN, Africa's biggest wireless company.

People familiar with the situation said Ambani was looking at how he could maximise an in-effect controlling position in MTN by seeking to persuade the South African mobile operator' shareholders to waive their right to a tender offer.

Until now it has been thought Ambani would limit himself to a 34.9 per cent stake in MTN, because if he went any higher he would be obliged under South African laws to make an offer to buy out the African company' other shareholders, The Finacial Times reported

But people close to the matter said Ambani was looking at the case for a "whitewash" procedure under which MTN's shareholders would vote on whether to waive their right to a tender offer. The Paper reported if the shareholders agreed, Ambani might end up owning 40-45 per cent of MTN, said one person close to the talks.

On May 26, Reliance and MTN began 45 days of exclusive talks on a possible merger that would create a telecom giant in emerging markets. Several transaction structures have been examined and no conclusions reached.

Ambani is seeking to engineer a de facto takeover of MTN under which he would swap most of his 66 per cent shareholding in Reliance for a near-controlling stake in the enlarged group. Reliance would become a subsidiary of MTN.

The talks are politically sensitive because MTN is one of South Africa's most successful post-apartheid companies. Any deal with Reliance would almost certainly be presented as a merger. They have also been complicated by the threat of legal action by Mukesh Ambani, Anil's brother, who is claiming a right of first refusal over any stake sale by Reliance.

[Honest 836]

MTN to hold AGM on Thursday

17 Jun, 2008, 2357 hrs IST, PTI

NEW DELHI: The South African mobile giant MTN, which is in exclusive talks with Anil Ambani-led RCOM, would hold its AGM on Thursday which comes amid a controversy on whether Mukesh Ambani-led RIL has first right of refusal for a controlling stake in RCOM or not.

The shareholders of MTN, which had late last month announced start of 45-day exclusive negotiations with Reliance Communications, would meet for the Annual General Meeting on June 19, the company has said in a notice to its shareholders.

The exclusive negotiation period would end in the first week of July.

Meanwhile, the shares of MTN today dropped by over two per cent in Johannesburg Stock Exchange.

Shares of RCOM also dropped by nearly 2 per cent on the Bombay Stock Exchange amid the tussle between the two Ambani siblings over the proposed MTN deal.

The RCOM scrip touched an intra-day low of Rs 525.25 in the morning trade, down 1.84 per cent as against yesterday's closing price of Rs 535.10 on the BSE. However, the counter recovered slightly to closed at Rs 530.20, down 0.92 per cent.

Mukesh-led Reliance Industries closed at Rs 2,329.20, up 1.94 per cent after touching an intra-day high of Rs 2,334.90 and low of Rs 2,262 on the bourse.

On the Johannesburg Stock Exchange, MTN shares fell 2.84 per cent to 135 rand.

A communication by RIL claiming its first right of refusal to buy a majority equity in RCOM had triggered the latest round of fight in middle of Anil Ambani Group company's negotiation with South African telecom major MTN group for an estimated 70 billion dollar amalgamation deal.

[Honest 836]

Ambani feud puts pressure on MTN deal

18 Jun, 2008, 1735 hrs IST

NEW DELHI: A fresh row between warring billionaire Ambani brothers could delay, but not kill, a tie-up of Reliance Communications, India's No.2 mobile operator and South Africa's MTN Group to create an emerging markets telco that would rank in the global top 10.

A deal may hinge on whether the brothers can avoid a lengthy legal wrangle that would severely test MTN's patience. Exclusive talks between Reliance Communications, controlled by Anil Ambani, and MTN appeared to be progressing well until Reliance Industries, run by elder brother Mukesh, claimed last week it had a right of first refusal to control of the mobile firm.

Analysts say Mukesh Ambani's claim, based on a complex 2006 agreement after their mother brokered a deal to carve up the late Dhirubhai Ambani's business empire, means a deal with MTN is unlikely before a 45-day exclusivity period expires next month. "A deal with Reliance is not impossible, but it is not probable. It's somewhere in between," said Rishi Sahay, of Indusview Advisors.

"There are so many ifs and buts, but there is clearly intent on behalf of both parties. When they know they can create one of the world's biggest telecom companies, I think they'd go all guns blazing for that," said Aman Bajaj, managing director of Nine Capital, a boutique advisory firm.

Investors are wary of any delay. Shares in Reliance Communications, which stepped up to the negotiating table on May 26 after bigger rival Bharti Airtel pulled out of talks with MTN, have fallen every day this week, losing close to 3 percent in a rising market.

OTHER OPTIONS

MTN, which holds its annual meeting on Thursday, may have other options than to hang around and wait for the squabbling Ambanis to resolve their dispute. Emirates Telecommunications has previously said it was evaluating a possible bid for MTN, the largest telecom in sub-Saharan Africa, and China Mobile has said it was interested in the South Africa market.

"MTN has in the past, and now also, got a multiple number of suitors," Indusview's Sahay said, adding MTN shareholders would likely press for details of how the talks were going and what other options lay ahead. Sources and media reports have said the structure of a deal would see MTN take control of Reliance Communications, with Anil Ambani swapping all or most of his 66 percent holding to become the largest shareholder in MTN.

That prospect seems to have spurred Reliance Industries, India's biggest firm, into action, laying claim to first right of refusal on any transfer of that controlling stake in Reliance Communications. "I think there's clearly a possibility. If there weren't any possibility, they would not be pursuing it that aggressively," said Nine Capital's Bajaj, who predicts the Ambanis would opt for an out-of-court settlement rather than a protracted, and costly, legal battle.

Mukesh, ranked by Forbes magazine as the world's fifth-richest man, and Anil, a close sixth, split acrimoniously in 2005 when they were unable to co-manage their late father's sprawling business empire. Separately, an agreement was signed in January 2006 by Reliance Industries and companies then under its control, but which are now part of Anil Ambani's Anil Dhirubhai Ambani Group (ADAG), prompting the claim of first refusal.

In its 2006 listing documents, Reliance Communications said there was a potential risk from a trademark management agreement, a non-compete agreement and a shared services agreement executed when the company was part of Reliance Industries.

On Friday, Reliance Communications said the claim by Reliance Industries was "legally and factually untenable, baseless, and misconceived." The brothers' long-running feud has several strands, including a dispute over the price Reliance Industries charges ADAG companies for its gas. The two firms also compete head-on for contracts, such as a bridge project to link south Mumbai to the mainland.

A consortium led by Anil won an initial bid for the bridge, beating an offer from a Mukesh-led group, but local media have reported the state government is reviewing that decision. "This is not the first time they are fighting. Even in the previous short battles they had, they always settled it," said Nine Capital's Bajaj.

[Honest 836]

Anil Ambani group says lawsuit option open against rivals

18 Jun, 2008, 2134 hrs IST

NEW DELHI: The Reliance Anil Dhirubhai Ambani Group (RADAG), which is engaged in consolidation talks with the South African telecom major MTN, Wednesday said it was open to criminal proceedings against some officials of Reliance Industries Ltd (RIL) for what it claimed was fraudulent misuse of powers by them.

The statement was in response to a letter to MTN from Mukesh Ambani-led Reliance Industries Ltd (RIL), claiming the first right to refuse majority stake in Anil Ambani's Reliance Communications, should they be put up for sale, based on a family pact two years ago.

"At this stage, all options including criminal proceedings against L.V. Merchant, Sandeep Tandon, K. Sethuraman and other RIL officials involved in the signing of Jan 12, 2006, agreement are open if RIL seeks to rely on the alleged agreement," said the statement from Reliance Communications.

When contacted, RIL's group president for corporate communications Paresh Chaudhry declined comment on the issue.

"I decline any comment. We will respond when we get a direct communication," Chaudhry told IANS.

The statement from Reliance Communications said the so-called pact of Jan 12, 2006, based on which the Mukesh Ambani-led group sought to stake a claim over the company, was one-sided and not on an arms length basis.

"Control of RCOM (Reliance Communications) board, handed over to Reliance Anil Dhirubhai Ambani Group, [came] only on Feb 7, 2006," the statement said. "[There was] criminal misuse of trust by RIL officials in execution of alleged agreement of Jan 12, 2006."

Amid these statements, Anil Ambani was expected to fly to South Africa soon to take the negotiations forward, officials at his group said.

The two Reliance groups were carved out after a split in the business empire created by the late Dhirubhai Ambani and his sons, Mukesh and Anil, who are now estranged. Both figure in the elite Forbes rich list.

MTN had said June 14 that its consolidation talks with Reliance Communications were still on, barely hours after the Anil Ambani-led group charged the Mukesh Ambani group with trying to derail the discussions.

Reliance Communications has been attracted by MTN's 70 million customers in 21 countries, including South Africa, Nigeria, Iran and Cyprus and its impressive balance sheet, showing a net profit of $1.58 billion on revenues of $9.62 billion.

And for the South African company, a consolidation will result in access to 48 million customers of Reliance Communications, covering 15,000 towns and 400,000 villages in India on a network of 165,000 km of optic fibre cables.

[Honest 836]

RCOM threatens to take criminal action against RIL officials

19 Jun, 2008, 0015 hrs IST

MUMBAI: Reliance Communications (RCOM), a group company of Anil Ambani-promoted Reliance Anil Dhirubhai Ambani Group (ADAG) on Wednesday, threatened to initiate criminal proceedings against three Reliance Industries (RIL) officials for unilaterally signing the controversial January 12, 2006, agreement.

This move is important in the wake of RIL threatening to claim it’s right of first refusal (RoFR) as per the January 12, 2006 agreement, which is main reason of fight between the Ambani brothers.

RCOM spokesperson said: “At this stage, all options, including criminal proceedings against LV Merchant, Sandeep Tandon, K Sethuraman and other RIL officials involved in the signing of January 12, 2006, agreement, are open if RIL seeks to rely on the alleged agreement.”

Reacting to RCOM’s threat, a RIL spokesperson said: “There is no criminality attached to the signing of the agreement dated January 12, 2006. If any proceedings are adopted, we will not only defend them but we will also consider our options for such a malicious action.”

Mr Sethuraman wrote the letter to RCom and MTN threatening to take legal actions if the any part of RCOM stake will be sold to MTN. Mr Tandon is advocate and serves as directors on several direct companies and holding companies of RIL. Mr Merchant also holds directorships of various Reliance group companies.

ET has seen letter written by ADAG officials to RIL on January 12, 2006, that alleged “fraudulent misuse of powers by RIL officials in execution of alleged agreement on January 12, 2006.”

The letter also charged RIL officials of “criminal breach of trust” and “gross violation of fiduciary obligations” in signing the alleged agreement, RCOM statement said. The letter termed the agreement as “one-sided and not on arms length basis.”

[KumaarShah 143]

Looks like ADA will not get MTN so easily, MDA will not allow RCOM to become larger than RIL. There seems to be a long legal tussle ahead. MTN may have to negotiate with others.

[Honest 836]

^^^

Very correct my dear Kumaar it seems this battle will go a long way. And again Ambani's mother, Kokila Ben will have to intermidiate.

Regards.

[Honest 836]

Deal with RCom not discussed at AGM: MTN

19 Jun, 2008, 2002 hrs IST, PTI

JOHANNESBURG: Shareholders of the South African telecom giant MTN on Thursday stuck to the agenda at the Annual General Meeting and the negotiations with Anil Ambani Group firm Reliance Communications did not figure in.

"Shareholders stuck to the agenda of considering annual report and Chairman Cyril Ramaphosa did not mention either Reliance or anything else... the Chairperson stuck to the agenda," MTN spokesperson Nozipho January-Bardill told reporters after the meeting.

Asked if the negotiations between MTN and RCOM for combining the business and the communication by Reliance Industries threatening legal action came up for discussion at the AGM, Nozipho said, "I am telling you only agenda items were discussed and nothing more.

"The agenda was circulated among the shareholders a few weeks back," she added

The AGM was being viewed with interest in India in the wake of Mukesh Ambani-led RIL's communication asserting that it had the first right of refusal on the majority stake in Younger brother Anil's group company RCom, triggering a bitter battle between the two camps.

[Honest 836]

MTN AGM skips RCOM proposal

20 Jun, 2008, 0122 hrs IST

JOHANNESBURG: South African mobile phone operator MTN continued to hold a wall of secrecy around its exclusive talks with Reliance Communications during its annual general meeting (AGM) on Thursday.

MTN and Reliance Communications started talks in May that could create a $66 billion emerging markets telecoms group. MTN chairman Cyril Ramaphosa signalled from the beginning of the meeting that the talks with Reliance Communications were not on the agenda.

He said only matters related to the notice of the meeting would be discussed by MTN shareholders. “As you all aware, the agenda of the meeting is clearly stated in the notice of this meeting and that’s what we are meant to do and deal with,” Ramaphosa said.

“So we get on the business of the meeting as set out in the agenda and notice of the meeting dealing primarily, specifically and only with the issues that are set in that notice. The meeting agenda was to reappoint directors and to consider the repurchase of up to 10% of the company’s shares.

Reliance Communications is owned by Anil Ambani, whose brother Mukesh owns Reliance Industries. The two had a public falling out in 2005 which resulted in a split in their massive business empire.

Mukesh has objected to Anil's bid to merge Reliance Communications with MTN, saying his permission is required for any sale of the family’s shares.

[@ksh@T 20]

RCom, MTN may clinch deal in 1st week of July

NEW DELHI: Anil Ambani-led Reliance Communications and South Africa's MTN are likely to finalise a deal by the first week of July, with the former expected to hold about 40 per cent stake in the estimated $70 billion merged entity.

According to sources close to the development, both companies have been engaged in exclusive talks since the last week of May. A final shape to the deal may surface at the end of the 45-day exclusivity agreement that ends on July 8.

Asked about the details of the merged entity, sources said final details are still being worked out, but hinted that Anil Ambani would end up holding between 34 to 40 per cent stake in the merged entity in which Reliance Communications would become MTN's subsidiary.

MTN is also understood to have taken a legal opinion on the issue raised by elder Ambani sibling Mukesh, who had claimed right of first refusal in case Reliance Communications sells majority stake in favour of MTN.

The respective teams from MTN and Reliance Communications have travelled to India and South Africa for carrying out due diligence of the companies, sources said, adding that the negotiations so far have been progressing well.

Earlier in a letter to MTN, RIL had warned that it would take legal recourse and claim damages if MTN became party to violation of the right of first refusal.

Sources said a team comprising over six executives of MTN had visited Reliance Communications headquarter in Mumbai about 10 days ago as part of the due diligence.

Reliance Communications shares is ruling around Rs 587.90, down by Rs 3.40 today.

The MTN Group had posted a 42 per cent increase in revenues to 73.1 billion rand for the 12-month period ended December 31, 2007 from 51.6 billion rand a year-ago.

The Group had also declared a dividend of 136 cents per share, which was the highest dividend ever by the Group.

[Honest 836]

ADAG moves court to save MTN deal

26 Jun, 2008, 0633 hrs IST

MUMBAI: The war of words between the Ambani brothers over RCOM’s proposed reverse merger with South African telco MTN may now reach the courts.

Two Anil Dhirubhai Ambani Group (ADAG) companies have filed caveats in the Bombay High Court, to ensure that no ex-parte order was issued in case Mukesh Ambani’s flagship company Reliance Industries (RIL) attempts to enforce its claimed first right of refusal in case a deal with MTN happens.

Sources said Reliance Communications (RCOM), which is in talks with MTN to create one of the world’s top telecom companies, and another company AAA Communications filed the caveats in the Bombay High Court last week. AAA Communications, ADAG’s investment arm, holds 63% stake of the group’s 66% stake in RCOM.

The bone of contention between the Ambani brothers lies in RIL’s claim that it holds the first right of refusal in case RCOM is sold to a third party. RCOM denies any such right. RIL sources said ADAG has repeatedly sought to enforce this right in case of various initiatives by RIL and by Mukesh Ambani and his associates.

Although MTN has maintained that the sibling rivalry would not have any impact on its talks with RCOM, experts said the deal may face the threat of getting delayed by the legal proceedings.

“This threat may have an impact on the share-swap ratio,” said a source, adding that MTN is now scrutinising the legal implication of RIL’s claim. However, this could not be independently verified with MTN.

Anil Ambani may visit London to firm up deal

It is learnt that Anil Ambani is expected to visit London shortly to give final touches to the proposed deal. Ken Kosta, Lazard’s head of Europe, is leading the ADAG effort from his London office.

If the deal happens, it will create a telecom company with a combined subscriber base of 115 million, covering Asia, Africa and the Middle East.

The broad contours of the deal being discussed between MTN and RCOM indicate that ADAG will emerge as the largest shareholder of the Johannesburg-based MTN, while RCOM will become MTN’s subsidiary. ADAG is expected to get nearly one-third stake in MTN by swapping his shareholding in RCOM.

ADAG may chip in a few billion dollars to top up the offer, depending on the share-swap ratio. Both parties have signed an agreement to hold ‘exclusive talks’ till July 8.

The animosity between the Ambani brothers is nothing new. They parted ways in June 2005, after one of the prolonged and bitterest battles in the history of Corporate India. Since then, both brothers have grown their business manifold and have displayed a habit of obstructing each other’s expansion plans. RIL sources claim that this propensity has mostly been exhibited by ADAG.

However, the latest round was begun by RIL, which two weeks ago sent a letter to MTN, claiming that it enjoys the first right of refusal in case RCOM is sold.

RIL’s claims are based on a disputed agreement with three ADAG entities signed on January 2006. RIL had also sent the same letter to RCOM a day later. The January 2006 agreement was to implement the demerger of businesses between the brothers.

RCOM’s reaction was swift. In a communication, made public within a day after getting the RIL’s letter, RCOM said: “The tone of the letter clearly indicates that it is part of a mala fide design, with no substance, to simply try and disrupt talks between RCOM and MTN, by raising the false bogey of litigation and damages.

The use of threatening and coercive language by RIL, India’s largest private company, with MTN, a globally respected telecom major, is very unfortunate.”

RIL had earlier said: “It has in good faith notified both ADAG and MTN of the stipulations contained in an agreement, the validity of which has never been questioned so far by ADAG.”

[Honest 836]

Ambani rivalry under scanner of Western media

Press Trust of India / London

July 01, 2008, 15:05 IST

More than the potential deal between South African telecom giant MTN and Anil Ambani group firm RCOM, it's the rivalry between the Ambani brothers that has caught the fancy of Western media which compares it to a potboiler penned by fiction writer Jeffrey Archer.

As the time draws closer to the expiry of exclusivity agreement between RCOM and MTN for negotiations, one newspaper after another in Britain and the US is commenting on the eruption of a battle between the two richest brothers in the world.

The controversy over the possible deal started with Mukesh Ambani-led Reliance Industries asserting its Right of First Refusal over the younger brother's company with legal notices to RCOM and MTN in the midst of negotiation for a deal that could create a $70 billion entity.

While UK's 'The Independent' termed it like one of famed novelist Jeffrey Archer's potboilers, a Financial Times columnist said the spat could make a "passable B movie."

Almost all of them felt it is all about one-oneupmanship between the two.

As 'The Independent' put things in a future perspective, "The next installment in the Ambani saga will show whether the rivalry between the two continues to drive both to still greater achievements — or whether, like a character in a Jeffrey Archer novel, only one can succeed."

But tension has been flaring up between the two all the time in these three years (since they parted ways), with both of them trying to steal the show from each other in areas ranging from construction and telecom to entertainment, writes a senior journalist at international business magazine 'Fortune'.

[Honest 836]

'RCOM's MTN deal doesn't breach pact'

2 Jul, 2008, 0000 hrs IST

NEW DELHI: Leading law firm Amarchand & Mangaldas (AMSS) is learnt to have given a clean chit to Anil Ambani-owned Reliance Communications (RCOM) over the company’s ongoing spar with Mukesh Ambani-owned Reliance Industries (RIL) on its proposed deal with South Africa’s largest telecom company, MTN.

ET has learnt that AMSS, after having examined the non-compete agreement between the two Ambani brothers in 2006, has told the Anil camp that elder brother Mukesh cannot use his first right of refusal to stall a RCOM-MTN deal, in case both telecom companies went ahead with their plans for a proposed reverse merger.

RCOM sources said the telco had sought legal opinion from three leading law firms on this issue including Amarchand & Mangaldas. The legal opinion comes even as international media has reported that MTN was concerned that the proposed merger, where RCOM would become its subsidiary, may be delayed and even go off-track on account of the spat between the Ambani Brothers.

RCOM’s 45-day exclusivity period for talks with MTN lapses on July 9. Unconfirmed reports doing the rounds on Tuesday said MTN would extend the deadline only if RCom provided proof that the legal spat between the Ambani brothers would not derail the $80-billion merger.

RCOM sought legal opinion after RIL claimed that it held the first right of refusal (RoFR) in case the telecom company is sold to a third party. While RIL has maintained that its right of first refusal to any stake sale stems from a proviso in the non-compete agreement linked to the process of demerger of the Reliance empire in 2006. The Anil Ambani faction has repeatedly rejected this claim.

Industry sources said the Reliance Communications-MTN deal could be restructured to avoid any legal complications. The current structure of the deal envisages a takeover of RCOM by MTN, where Anil Ambani would sell his 66% stake in the Indian telco for a 35% stake in the combined entity. Sources said both sides were open to junking this model and going in for a direct merger where RCOM would takeover MTN.

[KumaarShah 143]

RCOM looks at buying stake in MTN directly

MUMBAI/NEW DELHI: Anil Ambani’s Reliance Communications (RCOM) may be examining alternative structures to bring about its proposed mega-combination with MTN.

RCOM, possibly in partnership with a sovereign wealth fund based in the Middle East, may directly buy a large equity stake in MTN, emerging as the single largest shareholder.

This is to avoid legal disputes that may arise from Reliance Industries’ (RIL) claims of right of first refusal (RoFR) if RCOM were to enter into a reverse merger with MTN.

Under the reverse merger route, MTN would have made an open offer for RCOM followed by a share swap between Reliance ADAG, promoters of RCOM, and MTN. ADAG would then have emerged as the single largest shareholder of MTN while RCOM will become subsidiary of MTN.

That plan has not been junked, but sources close to the development said RCOM is also examining the option of directly acquiring a 40% stake in MTN. A Middle East-based sovereign wealth fund could join hands with RCOM for the acquisition of the controlling stake in MTN. The name of the fund could not be ascertained.

Since the South African stock exchange rules require any acquirer to launch a tender offer if its holding crosses 35% stake in a company, RCOM intends to acquire a shade lower than the threshold limit. Subsequently, RCOM is looking at a ‘whitewash’ procedure under which MTN’s shareholders will be asked to vote to waive their right to a tender offer.

If the shareholders agree, RCOM will scale up its stake to 40% in MTN. Otherwise, it will be contend with a stake just under 35%. However, RCOM will emerge as the single largest shareholder by far with its 35% stake. Newshelf 664, a trust, is currently the largest shareholder with its 13% stake.

A 35-40% stake would, however, mean there would be no consolidation of revenues and profits in RCOM’s books though there may be other synergies.

Industry officials said MTN could be valued at $35-40 billion against its ruling market capitalisation of nearly $30 billion for the transaction. So, RCOM will have to chip in $12-14 billion for the purchase of 35%. Its fund requirement will go up if the MTN shareholders allow it to acquire another 5% stake.

The transaction may be routed through a special purpose vehicle in which RCOM will hold majority control with the sovereign fund holding the remaining stake.

In addition to the foreign fund’s equity contribution, the SPV will raise debt to finance the deal. So, the pressure of funding the deal will be substantially reduced from RCOM’s balance sheet. An RCOM spokesperson declined to comment.

If the deal goes through in this form, it will be one of the largest overseas acquisitions by any Indian company. Tata Steel so far tops the list with its $12.9 billion purchase of the Anglo-Dutch steel maker Corus.

Interestingly, RCOM had entered into the discussions with MTN after the foreign telco refused to sell a majority stake to Bharti Airtel. A source close the development said MTN always wanted to combine the strength of the two companies.

“The new structure proposes that RCOM, instead of ADAG, will be the controlling shareholder of MTN. Both RCOM and MTN will enhance their partnership later. More importantly, this is the best option available under the changed circumstances,” he added.

‘Changed circumstances’ refers to RIL’s interpretation of a reverse merger of RCOM with MTN as ‘sale’ of RCOM leading to RIL possibly attempting to exercise its claimed RoFR in RCOM. “It’s certain that Reliance Industries will take legal recourse if RCOM reaches a reverse merger with MTN. The new structure, if it goes through, will mean RCOM directly buying a controlling stake in MTN. This beyond the so-called RoFR claims,” the source added.

Sources said both the parties are expected to extend the 45-day exclusive merger talks (during which the two sides would not talk to anyone else), which is slated to expire on July 8, by a couple of weeks. The due diligence is likely to be over by this week.

Newshelf 664 is the largest shareholder of MTN with a 13.1% stake. The Beirut-based Mikati family holds a 10.2% while PIC has a 9.7% stake. The rest 67.1% is widely held.

Meanwhile, Fitch Ratings upgraded MTN’s national long-term rating to ‘AA-(zaf)’ from ‘A+(zaf)’ with a stable outlook, reflecting MTN’s position as a leading emerging market mobile telecommunications player following considerable operational growth and its proven ability to operate successfully in challenging environments.

Fitch said the rating is supported by strong cash flow generation, low leverage and strong liquidity position of MTN which has a subscriber base of over 116 million in 23 countries.

Source The ET

[KumaarShah 143]

Falling shares, Ambani feud could scupper MTN deal

3 Jul, 2008, 1638 hrs IST, REUTERS

MUMBAI: India's Reliance Communications Ltd has days to reach an agreement for a tie-up with South Africa's MTN Group, but falling shares and a face-off between the Ambani brothers could all but scuttle a deal.

Shares in Reliance Communications, which is holding exclusive talks with South Africa's MTN to create a global top 10 telecoms company, have shed a third of their value since the company, run by Anil Ambani, said in May the firms were considering a potential combination. Reliance shares fell 6.9 per cent on Thursday.

There is no sign that the bitter rivalry between India's two richest men is letting up. Anil Ambani's aim to create a global company has been threatened by a claim from older brother Mukesh Ambani, who controls Reliance Industries, of first right of refusal on India's No. 2 mobile operator.

"The tiff has almost certainly scuppered the deal," said Emeka Obiodu, a senior mobile technologies specialist at London-based research firm Global Insight.

"As long as there is any uncertainty about the legal validity of a deal, it is unlikely MTN will go through with it. And there is no point in extending talks if the situation will not change."

The 45-day exclusivity period ends on July 8, Reliance said.

Reliance Communications said last month the claim by Reliance Industries would not delay its talks with MTN. But traders in Mumbai earlier this week said concerns that Mukesh may throw a spanner into the works had helped push down the share price.

The lower valuation of Reliance Communications, which now has a market worth of about $18 billion, down from nearly $27 billion when it first said it was in talks, could spoil the share swap that the two firms were reported to be discussing.

"Will MTN still be inclined to give Ambani a big stake, now that Reliance shares are down?" said Harit Shah, telecom analyst at Angel Broking, which has a 'buy' rating on the stock.

Media reports and a source close to the development had indicated the two firms were aiming at a reverse takeover, with a share swap that would give the Anil Dhirubhai Ambani Group the largest shareholding in MTN, and making Reliance Communications a subsidiary of MTN, sub-Saharan Africa's top mobile operator.

"Ambani may also need more cash, now that valuation has fallen, and that will be difficult in this market," Shah said, adding the deal had a "50-55 per cent chance" of going through.

The volume of worldwide mergers and acquisitions announced in the first half of 2008 fell by 36 per cent compared with the same period last year, Thomson Reuters data showed, because of volatile markets.

OTHER SUITORS

Newspapers reported on Thursday that Reliance Communications along with investors, including Middle East sovereign wealth funds, may buy a majority stake in MTN rather than merge operations as planned earlier.

A spokesman for Reliance Communications declined comment. Reliance Communications may also consider a revenue-sharing agreement, said Kevin Trindade, analyst at KR Choksey Securities.

"They will have to restructure the deal. The legal challenge from Reliance Industries can open a whole can of worms and a lengthy legal battle can drag the shares lower," he said.

A potential combination of MTN and Reliance Communications will have operations in about two dozen countries.

Reliance Communications, which has snapped up a series of smaller overseas assets recently, will not be content simply with growth in the Indian market, which Gartner consultancy forecast would expand cellular services revenue at 18 percent annually and add subscribers at 21 percent a year till 2012.

It is keen on Africa: it recently bought a telecoms firm in Uganda, and was one of four bidders last year for a controlling stake in Telkom Kenya, which went to France Telecom.

This time around though, it cannot hope to fend off other suitors for MTN, Obiodu said.

"MTN has signalled it's on the market and other bidders may only be waiting for the exclusivity period to end before they throw their hat into the ring," he said.

"Vodafone, France Telecom, Deutsche Telekom and China Mobile are all interested in the Middle East and African markets," he said.

An investment banker who is not directly involved in the deal also said MTN "would not play the waiting game" with Reliance.

"Anil is a tenacious guy and will fight, but he has nothing to offer as bait to keep MTN interested for long," he said.

The deadline to the talks comes two days after the death anniversary of Dhirubhai Ambani, founder of Reliance Industries, and still a strong influence on the squabbling Ambani brothers.

Anil, who chose his father's birth anniversary in December 2006 to announce his interest in Hutchison's controlling stake in the Indian mobile venture with Essar, may well pick the 6th.

"Anil's very particular about dates. He may say something on the 6th," Shah said.

[KumaarShah 143]

Anil Ambani-led consortium eyes 51 pc stake in MTN

3 Jul, 2008, 1609 hrs IST, PTI

LONDON/NEW DELHI: Seeking to thwart any possible legal challenge from Mukesh Ambani-led RIL, the Anil Ambani group firm RCOM is tying up with some global private equity and sovereign funds for acquiring a majority stake in South African telecom major MTN, a report said today.

"A consortium led by Indian billionaire Anil Ambani is considering taking a majority stake in South African mobile operator MTN to help stave off a potential legal challenge from his elder brother, Mike's Ambani, to the deal that has been under discussion," a report in Financial Times said.

The report quoted an unnamed person familiar with the deal that a special purpose vehicle controlled by Anil Ambani with co-investment from global private equity and Middle East sovereign wealth funds would own 51 per cent of MTN under the proposed new structure.

Earlier reports had said that it could be MTN acquiring a majority stake in RCOM, after which Reliance Industries warned off a legal action in letters sent to South African telecom firm and RCOM, claiming such a deal would breach a right of first refusal it has over the sale of a controlling stake in the Anil Ambani group company.

A possible amalgamation deal between RCOM and MTN, exclusive discussions for which started between the two parties late in May, could create a combined entity worth an estimated 70-80 billion dollars.

According to the Financial Times report, the old structure had Anil Ambani and his co-investors planning to acquire a 40-45 per cent stake, against about 51 per cent being discussed now.

This new structure will require a much larger cash top up from private equity firms of about 10-11 billion dollars, about three times the level earlier expected, the report said.

Separately, sources in the know of the development in India told PTI that hit by uncertainties caused due to the feud between Ambani siblings, RCOM and MTN are now believed to be discussing an extension of exclusivity agreement between them by a few weeks.

Investors in both the companies looked concerned about the legal issues raised by RIL and the same is being reflected in continuous slide in the share prices of the two companies, sources said.

African telecom giant MTN's share price fell to a three-month low of 118 rand yesterday, while shares of RCOM has also dropped by about a quarter in the last three months.

RCOM shares were trading at Rs 392, down 6.31 per cent on the Bombay Stock Exchange in afternoon trade today.

Reliance Communications and MTN had announced the start of 45-day long exclusive discussions on May 26, which is scheduled to end on July 8.

Sources in the know of development said that the two sides are discussing the possibility of extending the agreement by 2-3 weeks amid indications the same could be spelled out in the coming days.

Reliance Communications officials declined to comment on the development.

RIL had earlier written a letter to both the companies asserting its right of first refusal on majority stake in Reliance Communications, but these claims are being contested by the Anil Ambani group.