New Delhi: Debt-ridden Vodafone-Idea (VIL) crashed by over 14% on Tuesday after the company announced that the government of India will own nearly 36% of its shares in the process of conversion of dues into equity.
If the plan goes through, then the government will become one of the biggest shareholders in the company which is reeling under a debt burden of about Rs 1.95 lakh crore.
The decision will result in dilution for all the existing shareholders of the company, the wireless carrier said in a stock exchange filing.
"The Net Present Value (NPV) of this interest is expected to be about Rs 16,000 crore as per the Company’s best estimates, subject to confirmation by the DoT. Since the average price of the Company’s shares at the relevant date of 14.08.2021 was below par value, the equity shares will be issued to the Government at par value of Rs 10/- per share, subject to final confirmation by the DoT. The conversion will therefore result in dilution to all the existing shareholders of the Company, including the Promoters," Vodafone Idea said in a regulatory filing.
"Following conversion, it is expected that the Government will hold around 35.8% of the total outstanding shares of the Company, and that the Promoter shareholders would hold around 28.5% (Vodafone Group) and around 17.8% (Aditya Birla Group), respectively," it added.
Shares of VIL were trading at Rs 12.55 apiece, down by 15.49 per cent compared to the previous day, at the BSE in the morning hours.
The government has given telecom operators an option of paying interest for the 4 years of deferment on the deferred spectrum instalments and AGR dues by way of conversion into equity of the NPV of such interest amount.
VIL's total gross debt, excluding lease liabilities and including interest accrued but not due, as of September 30, 2021 stood at Rs 1,94,780 crore. The amount comprises deferred spectrum payment obligations of Rs 1,08,610 crore, AGR liability of Rs 63,400 crore that are due to the government and debt from banks and financial institutions of Rs 22,770 crore.
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