Bharti Infratel has decided to proceed with the scheme of arrangements between Indus Towers and Bharti Infratel Limited. Vodafone Idea will sell 11.15 % stake in Indus for Rs 4,000 crore, the company said. Bharti Infratel and Indus Towers together will become the largest tower company in the world outside China, with a pan-India tower reach comprising of 163,000 towers across 22 telecom service areas.
After deliberations, the board has decided to authorize the Chairman to continue with the scheme and to confirm with different procedural requirements for completion of the merger, approaching NCLT to make the scheme effective, subject to certain procedural condition precedents,” Bharti Infratel said in a statement to the Stock Exchange.
Shares of Bharti Infratel initially jumped nearly 4% on Tuesday during the early morning trade. However, trading became 2.4% lower at Rs 193.45 in the afternoon trade on BSE. In a separate media statement, VIL said that the value of its 11.15% Indus stake equates to a cash consideration of approximately Rs 4,040 crore, including the final determination that would take place quickly before the closing of the merger. It stated that the parties in the merger had also agreed to apply the FY20 Ebitda and net debt as at the closing date for the Indus and Infratel valuation, as agreed on pre-closing adjustments.
To maintain the payment obligation of VIL under the MSAs, Vodafone Idea and Vodafone Group have to get into certain security arrangements with the company for the benefits of the merged company. The report says that this includes the aggregate of a security deposit by Vodafone Idea, security through a pledge of some number of shares of the merged enterprise out of those issued to Vodafone Plc and a corporate guarantee by Vodafone Plc., that could bring in certain conditions and activities.
The security arrangement will offer the merged company, a payment cover of over a year for the operational payments due to Vodafone Idea. The scheme becomes effective on the date on which a certified copy of the order of National Company Law Tribunal is filed with the registrar of the company.
Customers are aware of the deal and the earlier merger ratio (1,565 shares of Bharti Infratel for every 1 Indus share) has got modified to 1,519 shares of Bharti Infratel for every 1 Indus share). Based on this, Vodafone Plc. and Bharti Airtel will now own 28.2% and roughly 36.7% in the merged towers entity respectively. Providence Equity Partners, which was determined not to exit, will keep 3.2% in the combined entity and the public holding will be 31.9%.
