The promoters of Vodafone Idea (Vi) have amended the shareholders agreement to protect their governing rights with the proposed issuance of equity to the central government.
In January, the board of the telecom company decided to convert interest with a net present value of Rs 16,000 crore on deferred dues into equity for the government. Currently Vodafone Group and Aditya Birla group have 44.39 per cent and 27.66 per cent stake respectively. The proposal is under consideration of the government.
The conversion of interest would lead to the government owning 35.8 per cent stake in Vi and significant dilution of shareholding for the two promoters. Post equity issuance, Vodafone Group and Birlas are expected to hold 28.5 per cent and 17.8 per cent stake respectively.
Thus the agreement has been amended to protect their governing rights. These include the right to appoint or dismiss key executives. Currently the rights are subject to a threshold of 21 per cent stake for each group and that has been reduced to 13 per cent as per the amendment. The amendment also lists out actions that the promoters will take in case shareholding of one of them falls below the threshold of 13 per cent.
The amended agreement will be put to vote at an extraordinary general meeting on March 26.
Vi is also seeking shareholder nod to raise up to Rs 14,500 and increase its authorised share capital to Rs 75,000 crore.
The board approved the fundraising plan which includes Rs 4,500 crore infusion from promoters and remainder by way of equity or debt instruments.
The company will seek the consent of the shareholders to offer, issue and allot up to 338.34 crore equity shares of face value of Rs 10 each for cash at a price of Rs 13.30 apiece.
Vodafone’s group firm Euro Pacific Securities and Prime Metals will subscribe to 253.75 crore equity shares. This will be 75 per cent of the total equity shares to be issued by the company on preferential basis, indicating a contribution of around Rs 3,374.9 crore from the British telecom major. Aditya Birla Group firm Oriana Investments Pte will subscribe to 84.58 crore equity shares which is about 25 per cent of the preferential shares of Vi as part of the fund raise, implying a contribution of Rs 1,125 crore. Business Standard