ATC Requests Vodafone Idea to Convert Rs 1440 Crore OCDs into Equity

Vodafone Idea informed the exchanges that American Tower Corporation (ATC), one of its largest telecom infrastructure service providers, has requested VIL to convert 14400 OCDs (Optional Convertible Debentures), amounting to Rs 1440 crore, into 144 crore fully paid-up equity shares having a face value of Rs 10 per share. As per the filing, Vodafone Idea will take the necessary actions to allot the equity shares to ATC to the conversion of these 14400 OCDs.

In February 2023, Vodafone Idea issued OCDs amounting to Rs 1600 crore to ATC Telecom Infrastructure Private Ltd. Additionally, Vodafone Idea extended the term of redemption on its first tranche of OCDs (worth Rs 800 crore) by 12 months in August 2023.

The OCDs were essentially issued to cover the debt accumulated due to non-payment by Vodafone Idea to ATC when it was unable to make its vendor payments to the firm. Furthermore, Vodafone Idea was the largest customer for ATC and had been unable to make its payments for several months due to liquidity crunches in the company. The total debt of Vodafone Idea towards ATC amounts to Rs 3600 crore.

While Brookfield has acquired the India unit of ATC in an all-cash deal of USD 2.5 billion, which is expected to close in the second half of 2024, ATC will retain the full economic benefits of OCDs issued by Vodafone Idea as per the agreement.

OCD stands for Optional Convertible Debentures is a type of financial instrument that combines the features of both debt and equity. Companies typically use OCDs to raise capital while providing flexibility to investors. It provides a financing option that balances the interests of both the company and investors, offering the potential for growth while providing downside protection through the fixed-income component.

Fundraising Plans

Furthermore, VIL also notified the exchanges that the company’s executives will meet with institutional investors in Singapore on Wednesday as part of their efforts to raise funds for the cash-strapped firm. Similar meetings are scheduled in Mumbai on Thursday and Friday.

Share Performance

At the beginning of the day, the shares of VIL opened at Rs 12.82 per share on the BSE, hitting intraday highs and lows of Rs 12.91 and Rs 12.64 respectively. Currently, while writing this article, they are trading at Rs 12.67 per share on the BSE, which is 1.48% down from Tuesday’s closing price. Additionally, the shares have delivered a negative return of around 3.5% in the past three months, while in the past one year, the shares have delivered an impressive return of 100% to the shareholders.

The current market capitalisation of the company stands at Rs 61,677 crore.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.