Vodafone Idea said in a regulatory statement on January 11 that the board of directors has approved the conversion of the full amount of interest related to spectrum auction instalments and adjusted gross revenue (AGR) dues into equity. “With this background, it is now informed that the Board of Directors, at its meeting held on 10th January, 2022, has approved the conversion of the full amount of such interest related to spectrum auction instalments and AGR Dues into equity,” according to the BSE filing. The conversion will therefore result in dilution to all the existing shareholders of the company, including the promoters.
“The Net Present Value (NPV) of this interest is expected to be about Rs 16,000 crore as per the Company’s best estimates, subject to confirmation by the DoT. Since the average price of the Company’s shares at the relevant date of 14.08.2021 was below par value, the equity shares will be issued to the Government at par value of Rs 10/- per share, subject to final confirmation by the DoT. The conversion will therefore result in dilution to all the existing shareholders of the Company, including the Promoters,” Vodafone Idea said.
The shares may be held through the statutory undertaking of the Unit Trust of India (SUUTI) on behalf of the Government of India or by any trustee-type or other suitable arrangement.
Vodafone Idea Share Dilution
Following the conversion, the government will hold around 35.8 per cent of the total outstanding shares of the Company, and that the Promoter shareholders would hold around 28.5 per cent (Vodafone Group) and around 17.8 per cent (Aditya Birla Group), respectively, it added.
The governance and other rights of promoter shareholders are governed by a Shareholders Agreement (SHA). The rights are subject to a minimum qualifying threshold of 21 per cent for each promoter group, the network service provider mentioned in the statement. The promoters, in light of the board’s approval, has agreed to amend the existing SHA to reduce the minimum qualifying threshold to 13 per cent from 21 per cent. The company said that there will be changes in the company’s Articles of Association (AoA).
The Department of Telecommunications (DoT) had offered Vodafone Idea had offered various options to the telecom companies to clear the pending AGR dues. Vodafone Idea opted for deferring payment of spectrum auction installments and AGR dues by 4 years.
DoT had also provided a time period of 90 days to the telecom operator to exercise the option of converting the interest that would accrue on instalment payment during the moratorium period into equity. The NPV of the amount was to be calculated as on the date of exercise of the option.
Shares of Vodafone Idea slumped 19 per cent to Rs 12.05 on the BSE in Tuesday’s intraday trade after the company’s board approved conversion of AGR and spectrum liabilities into equity. At 9.42 am, Vodafone Idea was down 17 per cent at Rs 12.30 on the BSE.
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