Mumbai, July 19: Anil Ambani is trying to bring the deal with MTN of South Africa back on the rails — but this time through a family-owned investment vehicle AAA Communications Pvt Ltd, which has a 63.38 per cent stake in the Rs 19,067-crore telephony giant.

A day after breaking off talks with MTN of South Africa, the younger scion also signalled that he could haul brother Mukesh to court with a suit for damages for scuttling the original deal.

In a strongly-worded letter to Mukesh Ambani-owned Reliance Industries Ltd (RIL) today, AAA Communications asserted its right to sell its holding, arguing that this entity wasn’t covered by the non-compete agreement between RIL and Reliance Communications Ltd (R-Com).

“The alleged agreement between RIL and R-Com is in no situation binding on AAA Com. The company remains free to and shall deal with R-Com shares as it deems fit,” AAA Com asserted.

Sources said AAA Com was an unlisted, closely-held entity and was, therefore, not obliged to make any public disclosure about talks with MTN.

Sources said if the two sides now engage in non-exclusive talks, then MTN would not be obliged to disclose this to its shareholders even though it is a listed entity on the Johannesburg stock market.

They pointed out that when MTN held non-exclusive talks with Vodacom, China Mobile and Vimpelcom of Russia some years ago, it had not made any public statement.

Claim for damages

At the same time, AAA Com said it “reserves the right to claim direct and consequential damages from RIL”.

AAA Com said RIL’s malafide interference had caused significant harm to it as a substantial R-Com shareholder. The shares of R-Com have fallen by Rs 107.85, or 19.86, per cent, since June 12, the day RIL shot off letters threatening legal action against R-Com and MTN if they forged a business alliance.

The non-compete agreement between RIL and Reliance Communications (formerly Reliance Comunications Ventures Ltd) has been contentious from the start.

The sudden change in the legal position — which is an attempt to draw a distinction between R-Com and AAA Com — put a different spin on why R-Com and MTN suddenly called off their talks yesterday.

The extended exclusivity period for the talks between R-Com and MTN was due to end on Monday.

Sources also suggested that Anil Ambani’s change in stand was an attempt to stymie further litigation by RIL.

Under the original plan, Anil Ambani was planning to swap a substantial portion of the 66.12 per cent promoters’ stake in R-Com for a 34.9 per cent holding in MTN. This would have made him the largest shareholder in MTN and yet retain control of R-Com. Ambani is believed to have built up a $7-billion war chest to acquire MTN shares.

If Anil pulls off the deal with MTN through his family-owned investment vehicle, it will deprive the 2 million shareholders of R-Com — most of whom are also shareholders of RIL — of any benefits from such a private arrangement.

“RIL’s assertion of its disputed right of first refusal will ironically jeopardise the interests of the minority shareholders of R-Com,” industry sources said.

Legal rebuttal

Since June 12, when RIL first warned MTN and R-Com about its intention to scuttle any deal, the Anil camp had rebutted the right of first refusal claim on three grounds.

First, the non-compete agreement was signed by Mukesh’s men at a time when they still controlled the companies and, therefore, the contentious provisions were not binding on them.

Second, legal opinion and Supreme Court judgements supported the R-Com’s stand that under section 111A of the Companies Act there could be no fetters on the free transfer of shares in an Indian public limited company.

Finally, a right of first refusal could not be enforced if such a clause wasn’t worked into a company’s articles of association. R-Com’s articles do not have any such proviso.