Kolkata: Vodafone Idea Ltd (VIL) has decided to collect by selling its 11.15% stake in Indus Towers for more than Rs 4 billion even as Bharti Infratel decided to go ahead with closing its mega tower merger with Indus .
Bharti Infratel said that the merged tower entity’s probable ownership structure is based on “the cash consideration chosen by VIL for its 11.15% stake in Indus, based on an agreed formula, and based on today’s calculation, the cash consideration is approximately Rs 4 billion. ” ”.
“The board of directors at its August 31 meeting took note of the status of the scheme of the arrangement between Indus Towers and Bharti Infratel and the related agreements … after deliberations, the board has decided to authorize the president to continue with the scheme and comply with other procedural requirements to complete the merger, including approaching the National Company Law Court (NCLT) for the scheme to be effective subject to certain procedural condition precedents, ”Bharti Infratel said in a pre-market hours exchange Tuesday.
Shares of Bharti Infratel initially rose nearly 4% in Tuesday’s morning trade, but were trading 2.4% lower at Rs 193.45 in afternoon trade on BSE.
In a separate press release, VIL said the value of its 11.15% stake in Indus equates to cash consideration of approximately Rs 4,040 crore, adding that the “final determination will take place shortly before the close of the fusion”. He said that the parties to the merger had also agreed to use the Ebitda and net debt for fiscal year 20 as of the closing date of the Indus and Infratel valuation, with certain pre-closing adjustments agreed upon ”.
Bharti Infratel, in turn, said that to guarantee VIL’s payment obligation under the framework service agreements (MSAs), “VIL and the UK’s Vodafone Group Plc have entered into certain security agreements with the company for the benefit of the merged company “.
This, he said, “includes a combination of a VIL security deposit, a pledge security for a number of shares of the merged company outside of those issued to Vodafone Plc (as part of the Scheme) and a corporate guarantee from Vodafone Plc. , which can be activated in certain situations and events ”.
These security agreements, added Bharti Infratel, remain “subject to all applicable regulatory approvals and any approval from Vodafone Plc’s lenders.” The security agreement will provide the merged tower company with payment coverage of more than a year for operational payments owed by VIL. VIL, for its part, said it had agreed to “make an advance payment of Rs 2.4 billion to the entity of the merged tower of the cash consideration ”to be received from Infratel at the time of closing. merged tower, after closing and VIL will have to pay only the remaining 50% of the undisputed quotas, “the Indo-UK Telecom JV said.
The prepayment amount, he said, would accrue 6% annual interest, adding that this would continue until the entire prepayment amount with accrued interest is fully adjusted.
People aware of the nitty-gritty told ET that the previous melt index (1,565 Bharti Infratel shares for every 1 Indus share) has changed to 1,519 Bharti Infratel shares for every 1 Indus share). On this basis, Vodafone Plc and Bharti Airtel will own 28.2% and approximately 36.7% in the merged tower entity, respectively. Providence Equity Partners, which decided not to exit, will own 3.2% in the combined entity. Public participation will be 31.9%.
VIL’s decision to withdraw money from Indus came just hours before the Supreme Court rendered the final verdict in the adjusted gross income (AGR) case on Tuesday. The nation’s highest court had reserved its order on the period during which such AGR payment could be made and under what conditions, and had stressed that a reevaluation of the telecommunications department’s AGR claim would not be allowed. Telecommunications companies have requested 15 years to settle their AGR fees, but the SC has said they need to make some upfront payments to take advantage of a deferred payment mechanism.
Bharti Infratel added that the merger scheme will go into effect on the date a certified copy of the NCLT order is filed with the Companies Registry. The effective date, he added, would be communicated to the stock exchanges for further public dissemination as the scheme comes into effect.
“While the parties have agreed to proceed to take appropriate steps to advance approvals for the merger, the completion of the transaction will be subject to receipt of all such approvals,” Bharti Infratel said in its exchange filing.
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