In an application to the Bombay Stock Exchange, the loss-making telecommunications company stated that its board of directors had approved the fundraising “by issuing either: (a) up to 188.8.131.521 Shares of face value of Rs 10 per share; or (b) up to 42,76,56,421 Warrants that can be converted into Equity Shares by Euro Pacific Securities Ltd.
In the event that the funds are raised through the allotment of shares, the issue price will be Rs. 10.20 pr. shareholding (including share premium of Re. 0.20 per shareholding).
In case of warrants, the issue price will be Rs 10.20 and 100% of the issue price will be paid in advance at the time of subscription of warrants. Each warrant can be converted into 1 share, and the rights attached to warrants can be exercised at any time within a period of 18 months from the grant date.
Vodafone Idea shares rose 0.71% to close today’s trading at 8.53 Rs. The announcement came after market time.
The Board of Directors also approved the convening of an extraordinary general meeting on Friday, July 15, 2022, to seek the shareholders’ approval for the aforementioned preferred issue.
Earlier this week, the telecommunications company announced that it intends to raise up to Rs 500 crore from its UK promoter.
In February and March, Vodafone Group had sold 7.1% of the shares in Indus Towers – 2.4% via a block agreement and 4.7% to Bharti Airtel – and raised around Rs 3,831 crore. Of this, it invested Rs 3,375 crore in Vodafone Idea by subscribing for new issued shares. The proceeds were used by Vodafone Idea to partially settle outstanding payments to Indus Towers.
The fresh fundraising from Vodafone Group is expected to come from the balance of the proceeds from its Indus Towers stake, analysts say. Vodafone Idea has so far raised a total of Rs 4,500 crore through the issuance of fresh equity, while the remainder comes from the Indian promoter.
The debt-ridden telecommunications company desperately needs cash to invest in its network as well as to participate in the upcoming spectrum auctions at the end of July. In addition to the funds from the initiators, the loss-making telecommunications company plans to raise an additional Rs10,000 crore in equity from an external investor and arrange debts of a similar amount from its lenders.
But the process hangs until the government converts the company’s interest on accrued quotas to 33% equity. The conversion and share issue are expected to be completed shortly.
Vodafone Idea had chosen to defer payment of its adjusted gross revenue (AGR) and frequency charges to the government by four years under a government assistance package for the telecommunications industry. The telecommunications company has also chosen to convert the interest accruing from the deferred contingent into state equity, which appears to be a 33% ownership interest in the company. This will make the government the largest shareholder, but the initiators – British Vodafone Plc and India’s Aditya Birla Group – will together own 50% of the company.