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Vodafone Idea promoters to participate for up to Rs 20,000 crore in rights issue

The fund raise is part of India's largest telecom operator's efforts to reduce debt and garner funds for future capex spends.

Vodafone Idea's promoter shareholders - Vodafone Group and Aditya Birla Group - will now participate for an amount of up to Rs 20,000 crore in the ongoing rights issue, instead of the previously announced amount of up to Rs 18,250 crore.

Meanwhile, the shares of Malaysia's Axiata Group Berhad - which has renounced its entitlement in the Vodafone Idea rights issue - have been picked up by some institutional investors. Axiata currently holds nearly 8.2 per cent stake in Vodafone Idea, Bloomberg data showed.

In a filing to stock exchanges, Vodafone Idea said that the promoters and promoter group reserve the right to subscribe to additional rights issue shares to meet any under subscription in the rights issue up to the extent permitted by the Sebi in its letter dated February 15, 2019.

However, the company stated in the stock exchange filing, that "any subscription of rights equity shares by the promoters and promoter group in excess of Rs 20,000 crore or the 'additional shares' shall be earmarked separately and any profits realised by the promoter or promoter group on the sale of such additional shares within one year from the date of allotment of such shares in the rights issue, net of taxes, shall be paid as additional cost on additional shares to the company by the promoter and/or promoter group".

"The profit on the sale of such additional shares would be based on the excess of the reference price over the rights issue price," it said. Akshaya Moondra, chief financial officer, Vodafone Idea, said that the move to increase the promoter participation in the ongoing rights issue had been initiated to prepare for any renunciation by a big investor.

However, as there was a concern about breaching the 75 per cent promoter shareholding limit, the company had taken permission from markets regulator Sebi to increase its promoter participation in the rights issue.

Vodafone Idea's Rs 25,000-crore rights issue opened on April 10 at a price of Rs 12.50 per equity share. The fund raise is part of India's largest telecom operator's efforts to reduce debt and garner funds for future capex spends.

The fund-raising move, which was first indicated by the company when it announced its July-September 2018 quarter earnings, comes at a time when Vodafone Idea needs to pare its high net debt of Rs 1.15 lakh crore as on December 31, 2018. Vodafone Idea's rights issue will close on April 24, 2019. -FE