Tata Power on Tuesday said that it would acquire 11.8 crore shares of Tata Teleservices (TTSL) for which it has already paid Tata Sons an amount of Rs 790 crore. The acquisition of the shares follows an inter-se agreement signed in March, 2009. Last Friday the Delhi High Court ruled Tata Sons could pay Docomo $1.17 billion as damages for its 26% stake in Tata Teleservices. Earlier in February, Tata Sons and NTT Docomo had jointly applied to the Delhi High Court to accept their agreed terms of settlement and clear the way for the payment and allow it to transfer its shares in TTSL to Tata Sons.
As per the share subscription agreement (SSA) between Docomo and Tata Sons in November, 2008, the former had the right to sell its shares at either fair value or at half of its investment price which ever was higher. With TTSL bleeding for years, Docomo finally exercised this option in 2014, which mandated Tata Sons to either find a buyer or itself buy Docomo’s stake at half the investment price.
Tata Power, which had made a profit of Rs 255 crore in FY09 for selling a part of its stake in TTSL to Docomo, in turn, had agreed to buy the same back. “If certain performance parameters and other conditions are not met, should the SP (NTT Docomo) decide to divest its entire shareholding in TTSL, acquired under the primary issue and the secondary sale, and should TSL (Tata Sons) be unable to find a buyer for such shares, the company is obligated to acquire the shareholding of the SP, at the higher of fair value or 50% of the subscription purchase price, in proportion of the number of shares sold by the company to the aggregate of the secondary shares sold to the SP, or if the SP divests the shares at a lower price pay a compensation representing the difference between such lower sale price and the price referred to above,” Tata Power had mentioned in FY09.
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Tata Power on Tuesday also said that the final amount payable would be determined on the date of the payment to Docomo and would hence vary from the R790 crore it has already paid. As of FY16, Tata Power held 32.8 crore shares representing a 6.97% stake in TTSL.