Govt to own 35.8 pc stake in Vodafone Idea after converting dues into equity

The Government of India will control 358 per cent stake in Vodafone Idea as the companys board has approved conversion of dues into equity Vodafone Idea said on TuesdayThe debtladen Vodafone Idea a joint venture of UKbased Vodafone Group and Kumar Mangalam Birlaled Aditya Birla Group has opted for conversion of interest on deferred spectrum and Adjusted Gross Revenue AGR liabilities into equityThe conversion will result in dilution to all the existing shareholders of the Company including the PromotersFollowing conversion it is expected that the Government will hold around 358 per cent of the total outstanding shares of the Company and that the Promoter shareholders would hold around 285 per cent Vodafone Group and around 178 per cent Aditya Birla Group respectively Vodafone Idea said in a statementThe Board of Directors of Vodafone Idea at its meeting held on 10th January 2022 approved the conversion of the full amount of such interest related to spectrum auction instalments and AGR Dues into equityThe Net Present Value NPV of this interest is expected to be about Rs 16000 crore as per the Companys best estimates subject to confirmation by the DoT Since the average price of the Companys shares at the relevant date of 14082021 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 company saidUnion cabinet on September 15 approved a slew of measures to support the cashstrapped telecom firms The relief measures include a fouryear moratorium on payment of spectrum and AGR dues The telecom firms have also been given the option to pay the interest amount arising due to the deferment of payments by way of issuing equity to the governmentFollowing the governments announcement Bharti Airtel and Vodafone Idea opted for the fouryear moratoriumHowever Bharti Airtel recently decided to pay the interest amount to the government instead of issuing the equityAfter the conversion of the dues into equity the Government of India will become the largest shareholder of Vodafone Idea This will require changes in the companys Articles of AssociationThe governance and other rights of the Promoter shareholders are governed by a Shareholders Agreement SHA to which the Company is a party and are also incorporated in the Articles of Association of the Company Vodafone Idea saidThe rights are subject to a minimum Qualifying Threshold of 21 per cent for each Promoter group and in light of the conversion of interest into equity the Promoters have mutually agreed to amend the existing SHA for reducing the minimum Qualifying Threshold from 21 per cent to 13 per cent for the purpose of exercising certain governing rights eg appointment of directors and relating to appointment of certain key officials etcVodafone Idea said its Board has also taken note of the proposed changes to the existing Shareholders Agreement SHA and accordingly authorised execution of the same and also recommended changes in the Articles of Association AoA to give effect to the changes in the SHAThe amendment to the AoA shall be subject to the approval of shareholders in general meeting for which the Board has authorised officials of the Company to decide the date of shareholders meeting in accordance with the terms of the amendment to the existing SHA as approved by the Board the company saidThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever