Bharti Telecom (BTL), the promoter firm of Bharti Airtel, is working on a capital reduction programme, which provides the company's minority shareholders an exit route.
Bharti Telecom (BTL), the promoter firm of Bharti Airtel, is working on a capital reduction programme, which provides the company’s minority shareholders an exit route.
BTL, which was de-listed in 2000, was engaged in manufacturing electronic push button telephones, telephone answering machines and cordless telephones.
Sources said BTL will offer Rs 196.80 per share to BTL shareholders to provide them an exit route as well as an opportunity to monetise their stake.
The consideration offered by BTL is Rs 163.25 per share, besides the dividend distribution tax (DDT) of around `33.55 per share on account of capital reduction. After de-listing, BTL shares are not marketable on any stock exchange and shareholders do not have an avenue to monetise their stake.
So, as an investor-friendly approach, BTL is seeking approval from its shareholders, through a postal ballot, for capital reduction, they added.
Currently, BTL has 4,942 shareholders holding around 1.09% stake, or 2.85 crore shares of `10 each. This puts the total amount that BTL is willing to spend at around Rs 560 crore.
When contacted, a Bharti Airtel spokesperson confirmed the development.
There have been several requests from minority shareholders of BTL to provide an exit route. The company has thus initiated the process of capital reduction, thereby providing an exit opportunity to such small shareholders, the spokesperson said.
“The price consideration of Rs 163.25 per equity shares (together with DDT of approximately Rs 33.55 per equity share payable by the company, the total consideration amounts to `196.80 per equity share) has been derived through a transparent valuation report by Ernst & Young, which takes into account the market price of BTL’s investment in Airtel shares and BTL’s borrowings. This is further supported by a fairness opinion from a Sebi-registered merchant banker,” the spokesperson said.
BTL holds a 50.10% stake in the country’s largest telecom operator as of March 2018.
“While as per statutory requirements, the proposal requires consent by way of a special resolution, keeping in view the high standards of governance we practice, BTL will proceed with the scheme provided consent of majority of the minority shareholders is also received,” the spokesperson said.