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In the absence of a response from the government regarding the conversion of interest dues into equity, debt-ridden telecom company Vodafone Idea's (VIL) proposal to issue mobile tower vendor ATC Telecom Infrastructure debentures worth 1,600 crore has lapsed, the telecom operator said on Tuesday.

Last month, the shareholders of Vodafone Idea approved the preferential issuance of optionally convertible debentures (OCD) worth 1,600 crore to ATC Telecom Infrastructure to settle the infrastructure vendor's debts by converting the outstanding balance into equity, provided that the balance was not paid within 18 months.

The OCD issue for ATC was subject to certain conditions including the approval of the government which was not complied.

The regulatory filing by the company stated, “We wish to inform you that as mentioned in the EGM (Extra-ordinary General Meeting) Notice, one of the conditions precedent for the preferential issue was conversion by the Government of India of interest from deferment of Adjusted Gross Revenue and Spectrum Dues owed by the Company into equity shares of the Company. As the Company has not received any communication from the Government of India on such conversion, the issuance of OCDs to ATC has not been completed, within the validity period of the shareholders resolution (i.e. 15 days from the date of passing of the resolution). Accordingly the shareholders' resolution has lapsed."

The statement further read, The Company is in discussion with ATC for extension of the agreement and a fresh shareholders' approval will be sought as required."

According to VIL, the government would have turned the interest from deferring the company's spectrum dues and adjusted gross revenue by the time OCDs were issued into equity.

The government has given telecom operators the choice of paying the interest on the NPV of such interest amount by converting it into equity. This option is available for both the AGR dues and the interest on deferred spectrum instalments.

Amounting to approximately a 33 % stake in the company, VIL has chosen to convert approximately 16,000 crore of interest liability that must be paid to the government into equity. The promoters' ownership will drop from 74.99 % to 50 %.

The government is awaiting the company's shares to stabilise at Rs. 10 per share before accepting a stake that VIL has offered it at par value of 10.

On the BSE on Tuesday, shares of VIL closed at Rs. 8.07, down 1.22% from the previous close.

(With inputs from PTI)

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