Vodafone Idea (Vi) will seek fresh approval from its shareholders on January 31 on its proposal to settle Rs 1,600-crore dues with equipment vendor ATC Telecom Infrastructure, through issuance of equity convertible debt bonds, according to an exchange filing by the company on Thursday.
The update from the company comes after its earlier, similar proposal lapsed on December 6, in the absence of communication from the government on converting Vodafone Idea’s deferred accrued interest dues into equity. The equity conversion by the government was one of the conditions set by ATC to accept bonds for settling its dues.
Last month, both ATC and Vodafone Idea mutually decided to extend the last date of the agreement on the bond issuance proposal to February 28, 2023.
“We wish to inform you that a meeting of the board of directors of the company is scheduled to be held on Tuesday, January 31, 2023, in relation to the said preferential issue of OCDs (optionally convertible debentures) to ATC and to convene the extraordinary general meeting of the company to seek approval of the shareholders in this regard,” Vodafone Idea said.
In an exchange filing last month, the telecom operator also said that the issuance of bonds to ATC is again subject to the conversion of interest dues into equity by the government. The company has opted for converting about `16,000 crore of interest liability payable to the government into equity, which will amount to around 33% stake in the company while promoters’ holding will come down from 74.99% to 50%.
However, the government has clearly indicated that the equity conversion will happen only when the promoters infuse money into the company first.
Vodafone Idea owes about Rs 3,000 crore to its tower vendor ATC. In November, the company had received approval from its shareholders for issuance of up to 16,000 OCDs having a face value of `1 million each, in one or more tranches. The amount, if unpaid in 18 months, would also give an option to ATC to convert the dues into equity at a price of `10 per share.
The equity convertible debt bonds will also carry a coupon rate of 11.2% per annum payable every six months during its term.
“As the company has not received any communication from the Government of India on such conversion (interest dues conversion into equity), the issuance of OCDs to ATC has not been completed, within the validity period of the shareholders resolution (ie 15 days from the date of passing of the resolution). Accordingly, the shareholders’ resolution has lapsed,” Vodafone Idea had said in an exchange filing.
Lately, both ATC and Indus Towers had expressed concerns over Vodafone Idea’s ability to clear its dues. For ATC, the shortfall in payments from Vodafone Idea was about Rs 392 crore in the July-September quarter.
“Based on indications from VIL (Vodafone Idea), we expect to defer recognition of a similar amount for the three months ended December 31, 2022, pending resolution. VIL has communicated its intent to fulfill the full amount of its contractual obligations commencing January 1, 2023, although no assurance can be given that this will occur,” ATC had said in a filing to Securities Exchange Commission.
On the other hand, Indus Towers recently said the company has paid the amount till December with regard to the agreed payment plan, but going forward, it has indicated challenges in complying with the higher payment plan.