The Vodafone Idea board on Tuesday, for the second time, approved a proposal to settle Rs 1,600-crore dues with telecom tower firm ATC Telecom Infrastructure through the issuance of equity convertible debt bonds. However, this time the board has not said the optionally convertible debentures (OCDs) would be subject to the government having converted the interest from deferment of adjusted gross revenue (AGR) and spectrum dues owed by the company. It was because of this particular condition by the board in October 2022 that the proposal had lapsed on December 6, 2022.
The government has till date not converted the accrued interest of Rs 16,000 crore due to the four-year deferment of AGR and spectrum dues into equity. This means that this time around, the company will only need the approval of its shareholders for the proposal to sail through.
The company has set February 28 as the deadline to complete the issue and will also convene an extraordinary general meeting on February 25 to seek shareholders’ approval.
“We wish to inform you that the board of directors of Vodafone Idea, at its meeting held today ie January 31, 2023, has again approved preferential issuance of up to 16,000 Indian Rupee denominated optionally convertible, unsecured, unrated and unlisted debentures having a face value of Rs 10,00,000 each, in one or more tranches, aggregating up to Rs 1,600 crore, convertible into equity shares at a conversion price of Rs 10 per equity share, to ATC,” Vodafone Idea said.
If the government was to convert the Rs 16,000 crore accrued interest into equity, it will end up having around 33% stake in the company, while the promoters’ holding will come down from 74.99% to 50%. However, the government has clearly indicated that the equity conversion will happen only after the promoters have infused money into the company.
Vodafone Idea owes about Rs 3,000 crore to ATC. In November, the company had first received approval from its shareholders for the issue. The amount, if unpaid in 18 months, would also give ATC an option to convert the dues into equity at a price of Rs 10 per share.
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The equity convertible debt bonds will also carry a coupon rate of 11.2% per annum payable every six months during its term.
“The funds so raised shall be used to pay amounts owed by the company to ATC under the master lease agreements and, to the extent of the remainder, for general corporate purposes of the company,” Vodafone Idea said.
At the end of the July-September quarter, Vodafone Idea’s gross debt (excluding lease liabilities and including interest accrued but not due) was at Rs 2.20 trillion, comprising deferred spectrum payment obligations of Rs 1.36 trillion, AGR liabilities of Rs 68,590 crore that are due to the government, and debt from banks and financial institutions of Rs 15,080 crore.
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