NEW DELHI: Huthchison-Essar and Essar Teleholdings have four days left to `amicably’ resolve the issue of merger with BPL Mobile in Mumbai. If the two are unable to sort the issue out by September 15, an arbitration tribunal will be set up for the job.
According to sources in both the camps, “it’s status quo.” But, nobody is ruling out the possibility of negotiations before the deadline of September 15.
Neither Hutch nor Essar officials were available for comment on the matter.
The Bombay High Court had ruled on August 10 that an arbitration tribunal must be set up within 30 business days, if the issue cannot be sorted out amicably by mid-September.
Essar had sent a termination notice to Hutch-Essar on August 1 to prevent a merger between Hutch-Essar and BPL Mobile in Mumbai. Following that, Hutch-Essar had moved the Bombay High Court against the termination notice.
The court restrained BPL Mobile and its shareholders from selling or transferring any of their shares to a third party for a period of four weeks after the tribunal is constituted.
The tribunal will have three arbitrators - one each for Hutch and Essar, and a neutral representative. The court wants the issue to be resolved through an arbitration process within four weeks of the tribunal being set up, making it till October 15. But, time extension can be sought by the tribunal.
After the court ruling last month, industry sources said, BPL Mobile Communications Ltd (BMCL) and its shareholders have been restrained from selling the shares or creating any further third party interest on the shares for a period of four weeks after the constitution of the tribunal. They added that “parties can apply to the tribunal within the period of four weeks to continue, modify or vacate the present order.”
Earlier, Essar had offered to refund around Rs 1,600 crore, which was the deposit it received from Hutch-Essar for buying the Mumbai operations of BPL Mobile. In 2005, Essar Teleholdings had bought BPL Mobile (Mumbai) and three other circles of BPL Communications for $1.15 billion. While the other three circles of BPL were merged with Hutch-Essar in January, 2006, the Mumbai merger was stuck because of the absence of government approvals. June 30 was set as the deadline for the merger of the Mumbai circle, but subsequently it was extended to July 31. Essar sent a termination notice on August 1 to its partner Hutch-Essar, citing delays in getting necessary government approvals for the merger deal in Mumbai.
The two partners in Hutch-Essar, a significant mobile operator in the country, have had an uneasy relationship for several months now over Egyptian company, Orsacom’s stake in Hutchison Whampoa. Orascom has an indirect stake in Hutch-Essar. Orascom’s stake in Hutch-Essar has been under the scrutiny of India’s security agencies.
