Bharti Infratel on Tuesday said its board of directors has decided to proceed with the scheme for merger with Indus Towers, including approaching NCLT to make the Scheme effective. Additionally, the scheme is the basis of cash consideration chosen by Vodafone Idea for its 11.15 per cent stake in Indus Towers is expected to be about Rs 4,000 crore, a company statement said.
In a regulatory filing the company said, “The Board of Directors in its meeting held yesterday i.e. August 31, 2020 took note of the status of Scheme of Arrangement between Indus Towers and Bharti Infratel Limited and the related agreements.”
“After deliberations the Board has decided to authorize the Chairman to proceed with the Scheme and to comply with other procedural requirements for completion of the merger including approaching NCLT to make the Scheme effective subject to certain procedural condition precedents,” it added.
A PTI report on Tuesday citing sources said, Bharti Airtel will hold 36.7 per cent stake in the merged entity, Vodafone UK (28.2 per cent), Providence Equity Partners (3.2 per cent) with public holding (31.6 per cent).
Sources said that the earlier merger ratio (1,565 shares of Bharti Infratel for every Indus share) has changed to 1,519 shares of Bharti Infratel for each Indus share.
Vodafone Idea has decided to cash out by selling its 11.15 per cent stake in Indus Towers.
“The above is basis cash consideration chosen by Vodafone Idea Limited (VIL) for its 11.15 per cent shareholding in Indus which will be based on 60 days VWAP as at Closing date (and agreed closing adjustments). Based on today’s calculation the cash consideration comes to approx. Rs 4,000 crore,” the filing said.
This will be based on 60 days volume weighted average price (VWAP) as at closing date and agreed closing adjustments.
To secure the payment obligation of VIL under the master service agreement, VIL and Vodafone Group have entered into certain security arrangements with the company, for the benefit of the merged entity.
This includes a combination of a security deposit by Vodafone Idea, security via pledge of a certain number of shares of the merged company out of those issued to Vodafone Group (under the scheme) and a corporate guarantee by Vodafone Group which can get triggered in specific situations and events.
These security arrangements are subject to regulatory nods and any approval of Vodafone Group Plc’s lenders, it said. “The security arrangement will provide the merged company a payment cover of over one year for the operational payments due from VIL,” it said.
The merger scheme shall become effective on the date on which certified copy of the order of NCLT is filed with Registrar of Companies. “The effective date will be communicated to the stock exchanges for further public dissemination as and when the scheme becomes effective.”
“While the parties have agreed to proceed to take appropriate steps to progress the approvals for the merger, the completion of the transaction shall be subject to receipt of all such approvals,” the filing added.
Earlier, the long stop date of the merger was extended five times. The merger was expected to complete by March 2019.