Vodafone Idea (Vi), a prominent telecom operator in India, has got the support of a majority of its shareholders to issue shares worth Rs 1600 crore to the ATC (American Tower Corporation). If the amount of Rs 1600 crore is unpaid to ATC even after 18 months, the tower company can convert the due amount into equity for itself. Vodafone Idea will be issuing debentures worth Rs 1600 crore to the ATC for now. The move was approved by the shareholders during an extraordinary general meeting (EGM) held by the company on November 21, 2022. Vodafone Idea submitted the development to the stock exchanges on Tuesday.
Vodafone Idea will be raising the due amount via equity-convertible debt bonds, which carry a coupon rate of 11.2% and will be payable every six months during its term. The funds raised by Vi would be used to pay ATC. The maximum term of the optionally convertible debentures (OCDs) is 18 months from the date of issue and allotment of the first tranche of the OCDs.
The benefit of OCDs is that it gives investors an opportunity to convert the debt into equity if the dues are unpaid for a decided timeline. Note that the Indian government is also in line to get equity from the company against the deferred interest dues worth Rs 16,000 crore. When the govt will make it happen is something we will have to wait and see.