Voda Idea to issue Rs 1,600-cr debentures to ATC 

Vodafone Idea on Friday said its board has approved to settle Rs 1,600-crore dues to equipment vendor ATC Telecom Infrastructure by converting the due amount into equity if unpaid in 18 months. Vodafone Idea will raise the amount through equity convertible debt bonds that carry a coupon rate of 11.2% per annum payable every six months during its term.

“The board of directors of Vodafone Idea at its meeting held on October 21, 2022, has, inter-alia, approved issuance of up to 16,000 Indian Rupee denominated optionally convertible, unsecured, unrated and unlisted debentures (OCD) 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 Telecom Infrastructure Private Limited,” VIL said.

The maximum term of OCD is 18 months from the date of issue and allotment of the first tranche of OCDs.

The OCDs provide options to investors to convert the debt into equity in case of non-payment of dues and interest within stipulated timelines.

Also Read: Vodafone Idea may issue convertible bonds to vendor

VIL said that “the preferential issue would be subject to certain conditions precedent, 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”.

VIL also owes Rs 7,000 crore to another key vendor Indus Towers, which has asked it to settle the full amount by November end or lose access to the towers.

VIL has opted for converting about Rs 16,000 crore of interest liability payable to the government into equity, which will amount to around 33% stake in the company while promoters’ holding will come down from 74.99% to 50%.

The government has given telecom operators an option of paying the interest for four years of deferment on the deferred spectrum instalments and AGR (adjusted gross revenue) dues by way of conversion into equity of the NPV of such interest amount.

The government is yet to convert the debt into equity and is waiting for the share price of VIL to stabilise at Rs 10.

The VIL board also approved the convening of an extraordinary general meeting of the company on November 21 to seek approval of shareholders for the aforesaid preferential issue.

At the end of the April-June 2022 quarter, VIL’s total gross debt (excluding lease liabilities and including interest accrued but not due) stood at Rs 1.99 trillion, comprising deferred spectrum payment obligations of Rs 1.16 trillion, AGR liabilities of `67,270 crore that are due to the government, and debt from banks and financial institutions of Rs 15,200 crore.