Vodafone Idea working on 'comprehensive' revival plan, banks to recast debt

Kumar Mangalam Birla, new investor to bring in fresh equity

Vodafone Idea is working on a “comprehensive” restructuring plan under which the company will get a new financial investor, promoter Kumar Mangalam Birla will make additional investment and Indian banks will be restructuring the company’s loans.

A top official of the company said the entire financial restructuring of the company is currently going on with negotiations with new investors and banks taking place simultaneously. “With the Indian government giving the moratorium for the payment of AGR dues, there is visibility on the company obligations. With fresh equity coming in from the promoter and a new investor, the operations will become viable,” the official said, asking not to be quoted.

The quantum of money to be invested by Birla in his personal capacity is not clear as it will depend on two factors: the quantum of investment by the new investor and banks taking a haircut, the official said.  Grasim, which holds a stake in the company currently on behalf of the ABG group, will see its stake declining, the official said. The Birlas are expected to maintain their current 27 per cent stake in the company post infusion of funds by the promoter.  

Vodafone PLC, which owns 44.3 per cent stake in VIL currently, will not invest in the company and see its stake coming down.

An Aditya Birla spokesperson declined to comment.

A top banking source said while the talks on elongation of loans of VIL is going on for a long time, there is no offer as yet on debt to equity conversion of the company’s loans. The company had debt facilities of Rs 37,562 crore as on August this year, as per a statement by Care.

The company’s debentures are coming up for repayment on December 13 and the company expects to pay the bond holders in time. The company will have to pay Rs 6,000 crore to the bond holders from December onwards till March next year.

VIL shares closed at Rs 9.88 a share, down by 4.26 per cent. The board of VIL will meet on November 12 to discuss the September quarter results.

In September last year, the VIL board had approved raising of funds through issue of equity shares and/or debt of upto Rs 30,000 crore in one or more tranches. However, the company said the total raising of funds was not to exceed Rs 25,000 crore. Till date, the company could not arrange for the funds due to uncertainty over AGR (adjusted gross revenues) due to the government which had spooked investors.

With the Indian government giving the moratorium on AGR payment worth Rs 60,960 crore till March this year, the company is expecting its financial metrics to improve considerably from the current financial year onwards.

The official said with the capital freed up for the next four years due to the moratorium, the company will be participating in the auction of 5th generation spectrum.

--With inputs from Abhijeet Lele