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Vodafone Idea to issue debentures worth Rs 1,600 crore to ATC Telecom

Vodafone Idea to issue debentures worth Rs 1,600 crore to ATC Telecom

Vodafone Idea to issue debentures worth Rs 1,600 crore to ATC Telecom
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By CNBCTV18.COMOct 21, 2022 8:29:55 PM IST (Published)

In the filing, Vodafone Idea said the funds raised will be used to pay the money "owed to ATC by the Company under the master lease agreements" and, any funds remaining will be used for the company's "general corporate purposes".

The Board of Directors of cash-strapped Vodafone Idea (Vi) on Friday has approved the issuance of debentures worth Rs 1,600 crore to ATC Telecom Infrastructure Private Limited, the telecom operator said in a regulatory filing.

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In the filing, In the filing, Vodafone Idea said the funds raised will be used to pay the money "owed to ATC by the Company under the master lease agreements" and, any funds remaining will be used for the company's "general corporate purposes".
The preferential issue will be subject to certain conditions, "including inter alia the approval of the shareholders of the company, and the Government of India having converted the interest from deferment of Adjusted Gross Revenue and spectrum dues owed by the Company.".
On Thursday, markets regulator Securities and Exchange Board of India (SEBI) approved the government's proposal to convert Vi's pending deals into equity.
This is significant since the SEBI approval was needed because the government had to convert its stake for Rs 11.80, while the Vodafone Idea stock price was below the face value of Rs 10.
As a result, the SEBI rules did not permit it, which is why the government sought clearance from the regulator. Now that it has happened, it clears the way for the government to convert.
The conversion of interest on AGR dues which stand at Rs 16,130, which means that once the government converts the interest on AGR dues into equity, the debt on Vodafone Ideas books comes down by Rs 16,000 crore, and the government will be holding close to about a 33 percent equity stake.
This paves the way for the government to go ahead and convert its stake.
Only once the government converts its stake into equity will external funding be possible for Vodafone Idea. Vodafone Idea is seeking to raise about Rs 10,000 crore of equity funds and Rs 10,000 crore of debt from banks to fund its 5G plans.
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