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Anil ups Reliance Comm stake

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Our Corporate Bureau Mumbai
Last Updated : Jun 14 2013 | 5:03 PM IST
Group restructuring to increase market cap to over Rs 61,000 cr.
 
The Anil Ambani-controlled Reliance Anil Dhirubhai Ambani Group (Reliance-ADAG) today announced a major restructuring of its telecom empire to make Reliance Communications Ventures (RcoVL) the flagship company having control of the assets and franchises of all operating firms.
 
The scheme proposed that RcoVL would merge Reliance Infocomm (RIC) with itself. It will have wholly owned subsidiaries ""Reliance Telecom (RTL), Reliance Communications Infrastructure (RCIL) and Flag Telecom.
 
Following the restructuring, the promoters' stake will increase to 63 per cent from about 40 per cent now in RCoVL. Foreign investors will hold 18 per cent, retail Indian investors 14 per cent and domestic institutions and mutual funds 5 per cent.
 
The increase in the promoters' stake follows their decision to transfer their 64 per cent equity in Reliance Telecom, 55 per cent in RCIL and 35 per cent in Reliance Infocomm to the reorganised RcoVL.
 
Following the reorganisation, RcoVL's paid-up equity share capital will increase to 2.045 billion shares of Rs 5 each at Rs 1,022 crore, the company said, adding that there would be no change in the free float of the company comprising 750 million shares valued at Rs 22,500 crore.
 
"Based on the closing stock price of Rs 301 on March 10, RCoVL's post-reorganisation market capitalisation would stand at Rs 61,000 crore," the statement said.
 
RCVL will also control the ownership of its headquarters Dhirubhai Ambani Knowledge City that is owned privately now. On completion of the reorganisation, RCVL will become the major operating company of the group's telecom business with over 19 million customers.
 
The reorganisation, which is based on valuations by KPMG and JM Morgan Stanley, would be effected from April 1. Trammell Crow Meghraj Pvt Ltd has advised on the property valuation. The legal advisors to the scheme are Mulla & Mulla & Craigie Blunt & Caroe.
 
As a result of this exercise, interests of all shareholders would be converged into a single listed entity in the most transparent manner, the company statement said, adding this would also create synergies and eliminate areas of potential conflict of interest and related party transactions.
 
Immediately after the decision, Anil Ambani, who did not attend the board meeting as he was an interested party, said, "the proposed reorganisation upholds the highest principles of transparency, fairness and corporate governance."
 
While the reorganisation would not entail any cash outgo and be effected through share swapping only, the valuation of the telecommunication businesses, with over 19 million subscribers was done after two independent international firms KPMG and JM Morgan Stanley submitted their report.
 
The proposed scheme of re-organisation will take full effect from Ap ril 1, 2006, it said.
 
The re-organisation also completely transforms the legacy structure (from the period prior to restructuring of the Reliance group) and gives RcoVL 100 per cent ownership of all operating companies, assets and franchises, the statement said.
 
On the completion of reorganisation, RcoVL will become a major operating company with over 19 million individual and enterprise customers, the statement added.
 
"I had agreed to eliminate all promoter shareholding in Reliance Communications group at multiple l evels... All shareholders will now own shares only in Reliance Communications."
 
In a veiled criticism of the complex structure of the Reliance group, he said "the sub-optimal structure is a legacy arising from the period prior to the restructuring of the Reliance group. This was done to align the interest of all shareholders and to remove any potential conflict of interest, he said.

 
 

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First Published: Mar 13 2006 | 12:00 AM IST

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