Vodafone Group on Monday said that it has agreed with Bharti Airtel and Vodafone India to continue with the completion of the merger between Indus Towers and Bharti Infratel. The British telecom giant said that it expects to be issued 760 million new shares post the completion of the merger translating to 28.2% stake in the combined company. It has been said that the new shares will be issued to Vodafone group in exchange for its 42% shareholding in Indus Towers. Further, it was said that Providence Equity Partners has also elected to receive shares in the combined company. Providence currently holds 4.85% stake in Indus Towers.
Airtel and Vodafone Group to Jointly Control Combined Company
Crucially, the new shares expected to be issued to Vodafone Group is also said to be on the basis that Vodafone Idea has opted to sell its complete 11.15% shareholding in Indus Towers for cash. As per the current valuation as highlighted by Vodafone Group on Monday, Vodafone Idea is set to receive around Rs 4000 crores in cash post the completion upon the merger between Indus Towers and Bharti Infratel.
Vodafone Group stake in the combined company based on the current valuation of Bharti Infratel would carry a value of around Rs 15,100 crores. Further, Airtel’s shareholding in Bharti Infratel post the completion of the merger would be diluted from 53.5% to 36.7%.
Vodafone Group in the release also highlighted that it will control the combined company with Airtel.
Vodafone Idea to Pay Rs 2400 Crores Under Security Package
However, the group in its release said that the parties have all agreed for a “security package.” It was said that the package would be invoked in the case of Vodafone Idea failing to satisfy specific “payment obligations” under its Master Services Agreement (MSA) with the merged company.
The security package is said to include the prepayment in cash of Rs 2400 crores by Vodafone Idea to the merged company with respect to its “present and future obligations.” Further, a primary pledge over shares owned by Vodafone in the new combined company carrying a value of Rs 4000 crores is also said to be part of the security package.
The security package is also said to include a secondary pledge over shares owned by Vodafone Group in the combined company with a maximum liability cap of Rs 4250 crores.
In a regulatory filing on Monday with the stock exchanges, Vodafone Group said that it has now received the consent from the existing lenders of Vodafone for its security package.
“This consent has now been received,” Vodafone Group said in its filing. “The parties will now approach the National Company Law Tribunal to make the merger scheme effective. The parties are working to complete the transaction expeditiously.”
The merger between Indus Towers and Bharti Infratel was initially announced in April 2018 with the combined company emerging as the “largest tower company in the world outside China.”
