Vodafone Idea to raise Rs 4,500 crore by issuing shares to promoters

The cash-strapped telco Vodafone Idea Ltd on March 3 said its board has approved raising Rs 4,500 crore via issuing shares to its promoters Vodafone Inc and Aditya Birla group entities on a preferential basis.

The firm will issue up to 3.39 billion shares at Rs 13.30 a share, 20% premium to its current market price, to Euro Pacific Securities Ltd, Prime Metals Ltd and Oriana Investments Pte Ltd on preference basis.

Euro Pacific Securities Ltd and Prime Metals Ltd are Vodafone Group firms while Oriana Investments Pte is Aditya Birla Group company. Vodafone Group and the Aditya Birla Group (ABG) own 44.39% and 27.66%, respectively in Vodafone Idea as its co-promoters.

The firm said its board has also approved the issue of shares or securities convertible into equity shares, global depository receipts, American depository receipts, foreign currency convertible bonds, non convertible and convertible  debentures, warrants etc worth Rs 10,000 crore in one or more tranches.

An extraordinary general meeting will be held on March 26 to approve the fund raising.

Last week, the Vodafone Group (Vodafone) raised around Rs 1,442 crore by selling 2.4 percent stake in Indus Towers via a block deal to an unnamed investor. It will also sell another 4.7 percent stake to Bharti Airtel in the Tower unit. This deal is on the condition that funds will be used by Vodafone, as fresh equity in Vodafone Idea  and simultaneously remitted to Indus to clear VIdea’s outstanding dues.

Vodafone Idea’s contention is that since the government’s relief package has allowed the company to pay its AGR dues after four years and also secure the repayment through an option to convert the principal due amount into further government equity in the company, there was no need to keep holding onto the bank guarantees, the ET report added.

The firm also said that its board appointed KK Maheshwari, vice chairman and non-executive director of UltraTech Cement Ltd, a nominee of Aditya Birla Group, as an additional director (non-executive and non-independent) with effect from March 3.

Maheshwari has held several key leadership roles, including that of steering the Group’s chemicals, international trading, pulp and fibre, textiles, and cement business, the firm said in a notice to exchanges.

Shares of Vodafone Idea, closed higher for the fourth session on Thursday, thus advancing as much as 15% during the period. On Thursday, the stock closed at Rs 11.08 on BSE, up 6% from its previous close.