Moving in tandem with the Sensex, the share price of Network 18 Media & Investments fell 1.08% to Rs 32.05 in early Tuesday trade on the Bombay Stock Exchange despite Raghav Bahl, managing director of Network 18 group, announced his plan to make the company debt free post rights issue. Sensex also fell over 28 points to 18514.83.
While announcing the objectives of rights issue, Bahl said that a majority of fund raised through rights issue would be used for retiring its existing debt which would make the company debt-free.
The rights issue which opened today will issue 89.98 crore shares at Rs 30 per share in the ratio of 307 shares for every 50 shares held.
The share touched its 52-week high Rs 99.71 and 52-week low Rs 26 on 20 September, 2011 and 13 September, 2012, respectively.
Early this year, Reliance Trust held a significant interest in
Network18 Group, as disclosure statements reveal complex web between the groups Independent Media Trust (IMT), created by Reliance Industries (RIL) to hold its interests in the Network18 Group, would be managed by an entity owned by Raghav Bahl, the promoter of Network 18 group.
Nilrab Media Pvt Ltd, the trustee, is owned jointly by Bahl and his wife, Ritu Kapur. IMT will hold considerable economic interest in the Network18 Group after the acquisition of Eenadu, according to regulatory filings by Network18 Media and TV18 today. The two companies filed offer documents with the market regulator to raise Rs 2,700 crore each through rights issues.
The move to appoint a private company as the trustee of IMT is slightly different from what had been announced earlier. In January, RIL had said the “independent trust will have eminent individuals as Trustees, thus preserving the management, operational and editorial independence of these media companies”.
In a three-way deal, IMT will fund the promoters of Network18 and TV18 to subscribe to rights issues. The companies will, in turn, use these proceeds to complete the ETV acquisition.
Of the Rs 2,700 crore raised through the rights issue, Network18 will use Rs 1,384 crore to subscribe to the rights issue of TV18 Broadcast, so as to keep its stake above 50%. Of the rest, it will use Rs 1,182 crore to repay loans. TV18 will use Rs 1,925 crore to complete the ETV acquisition. It will use Rs 421 crore to repay loans in its books, the companies said in their offer documents.
TV18 will buy out a firm called Equator, which in turn owns a firm called Panorama, which controls ETV’s news channels business. Equator also has 50% in Prism, the company that owns ETV’s entertainment channels and 24.5% in the third entity, Eenadu, which owns the Telugu news channels.
