Shares of Vodafone Idea were dropping on Wednesday even after the cash-strapped telco decided to issue shares to an external investor.
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What Happened: Vodafone Idea announced on Tuesday it would issue equity shares valued at ₹1,440 crore to ATC Telecom Infrastructure.
This issuance is part of a conversion from optionally convertible debentures (OCDs) held by ATC, resulting in the latter acquiring a 2.9% stake in the telecom operator’s adjusted share capital, as reported by Mint.
The carrier detailed in its exchange filing that on March 18, ATC had exercised its option to convert 14,400 OCDs, collectively worth ₹1,440 crore, into 144 crore fully paid-up equity shares, each with a face value of ₹10. Vodafone Idea is committed to fulfilling the conversion request in accordance with the terms outlined for the OCDs.
Vodafone Idea’s financial obligations include outstanding payments to various vendors and tower service providers, among them ATC and Indus Towers, which remain unsettled. Notably, ATC has initiated steps to withdraw from the Indian market.
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In a strategic move to alleviate financial strain, Vodafone Idea had previously issued OCDs totalling ₹1,600 crores to ATC Telecom Infrastructure Private Ltd (ATC) in October 2022, utilising the proceeds to settle dues owed to ATC. The conversion rate of ₹10 per share for the OCDs was set above the market value of Vodafone Idea’s stock at the time of issuance.
Further developments saw the extension of the redemption timeline for the initial batch of OCDs, worth ₹800 crore, by an additional 12 months in August 2023.
Amid ongoing efforts to stabilise its operations, Vodafone Idea is actively pursuing a fundraising initiative aiming to secure ₹45,000 crore. This plan includes a significant ₹20,000 crore equity infusion from current shareholders.
A crucial shareholder meeting is scheduled for April 2 to deliberate on the fundraising strategy, with the company aiming to finalize the equity portion by the end of the June quarter. After the equity raise, Vodafone Idea plans to procure the remaining funds through debt instruments.
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Price Action: Vodafone Idea’s share price was down 0.78% at ₹12.75 near the start of trade on Wednesday.
