Bharti Infratel to proceed with Indus Towers merger; VIL's cash consideration at Rs 4,000 crore

New Delhi: Bharti Infratel on Tuesday said its board has decided to proceed with the scheme for merger with Indus Towers, and that the cash consideration chosen by Vodafone Idea for its 11.15 per cent stake in Indus Towers is expected to be about Rs 4,000 crore.

The company said its board, in a meeting held on August 31, 2020, took note of the status of scheme of arrangement between Indus Towers and Bharti Infratel and the related agreements.

"After deliberations, the board has decided to authorise the chairman to proceed with the scheme and to comply with other procedural requirements for completion of the merger including approaching NCLT (National Company Law Tribunal) to make the scheme effective subject to certain procedural condition precedents," it said in a regulatory filing.

Bharti Airtel will hold 36.7 per cent stake in the merged entity, Vodafone UK (28.2 per cent), Providence Equity Partners (3.2 per cent) with public holding (31.6 per cent), according to a source.

Sources said that the earlier merger ratio (1,565 shares of Bharti Infratel for every Indus share) has changed to 1,519 shares of Bharti Infratel for each Indus share.

The likely shareholding structure of the merged entity "is basis cash consideration chosen by Vodafone Idea Limited (VIL) for its 11.15 per cent shareholding in Indus..."

This will be based on 60 days volume weighted average price (VWAP) as at closing date and agreed closing adjustments.

"Based on today's (Tuesday) calculation the cash consideration comes to approximately Rs 4,000 crore," it said.

To secure the payment obligation of VIL under the master service agreement, VIL and Vodafone Group have entered into certain security arrangements with the company, for the benefit of the merged entity.

This includes a combination of a security deposit by Vodafone Idea, security via pledge of a certain number of shares of the merged company out of those issued to Vodafone Group (under the scheme) and a corporate guarantee by Vodafone Group which can get triggered in specific situations and events.

These security arrangements are subject to regulatory nods and any approval of Vodafone Group Plc's lenders, it said.

"The security arrangement will provide the merged company a payment cover of over one year for the operational payments due from VIL," it said.

The merger scheme shall become effective on the date on which certified copy of the order of NCLT is filed with Registrar of Companies.

"The effective date will be communicated to the stock exchanges for further public dissemination as and when the scheme becomes effective. While the parties have agreed to proceed to take appropriate steps to progress the approvals for the merger, the completion of the transaction shall be subject to receipt of all such approvals," the filing added.