Vodafone UK to sell remaining 3% stake in Indus Towers via book build offering for repaying debt
- Vodafone UK to sell remaining 3% stake in Indus Tower via bookbuild offering for repaying debt.
Vodafone Group Plc will sell its remaining 3% stake in telecom infrastructure developer Indus Towers. The UK firm said on Wednesday that its remaining 79.2 million shares in Indus Towers will be sold through an accelerated book build offering.
The European telecommunications major is selling the shares with most of the proceeds to be used to repay debt of about $101 million related to its Indian assets. At Wednesday’s closing price of ₹353.60 per share on BSE, the value of the shares was $331.5 million or ₹2,800 crore.
Also read | Airtel's data centre business Nxtra, Indus Towers merger unlikely: CEO Vittal
As part of chief executive officer Margherita Della Valle’s efforts to cut exposure to underperforming markets, Vodafone sold an 18% stake in Indus Towers in June raising ₹15,300 crore or $1.82 billion.
Pledge released
“As per the terms of the security package provided by Vodafone promoters to secure the payment obligation of Vodafone Idea Ltd under the Master Services Agreements, the company released the pledge on 3.003% shares held by Vodafone promoters in the company today for the relevant Vodafone promoters to execute the sale of such shares and utilize the proceeds as per the terms of the security package provided by Vodafone promoters,” Indus Towers said in a statement to BSE.
Master services agreements or MSAs are agreements are contracts under which telcos lease towers or tenancies from tower providers.
Also read | No gain for Vodafone Idea from parent's 18% stake sale in Indus Towers
Indus Towers has a security over the residual proceeds from the sale to guarantee obligations from Vodafone Idea to Indus under the MSA. Vodafone Group entities Omega Telecom Holdings Pvt. Ltd and Usha Martin Telematics Ltd will be selling their holdings.
“Vodafone intends to contribute the residual proceeds from the placing (after repayment of Vodafone’s outstanding borrowings) towards an issue of new equity shares by Vi (a “Capital Raise”) once the terms of such a Capital Raise have been evaluated and decided on by the Board of Directors of Vi,” the group added.
To raise debt capital
Vodafone Idea is slated to raise ₹35,000 crore as debt capital for which it has been in discussion with banks and financial institutions over the past several months. This is part of the ₹50,000–55,000 crore capex expenditure that Vi intends to undertake over the next three years, the other part of which was a ₹18,000 crore FPO done in April this year, which was the country’s largest till date. Vi did not clarify when the new equity shares will be issued through the capital raise.
Also read | Bank guarantee waiver to help Vodafone Idea's debt funding plans
Vodafone Group added that after repayment of Vodafone’s outstanding borrowings, if any Indus shares remain, the shares and any proceeds which are not used by Vodafone to subsc-ribe to new shares in Vi would be available to Indus to guarantee Vi’s obligations under the MSAs.
Vodafone and Indus Towers did not comment further.
The move follows Bharti Airtel increasing its stake in Indus Towers to 50.005% in October, making Indus a subsidiary of the No. 2 carrier. As per Bloomberg, the price range of the offer is ₹343 to ₹358 per share of Indus. The bulk sale will take place on 5 December, to be managed by BofA Securities India and Kotak Mahindra Capital Co.
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