Vodafone Idea allots ₹1,200 cr debentures to ATC Telecom Infra; stock up 2%

Shares of cash-strapped Vi (Vodafone Idea) rose nearly 2% in early trade on Tuesday after the telecom operator issued optionally convertible debentures (OCDs) worth ₹12,000 crore to ATC Telecom Infrastructure. The Indian rupee denominated debentures was issued to ATC Telecom Infra, the Indian arm of Boston-headquartered ATC, to settle dues of the tower company by converting the pending amount into equity, if the dues remained unpaid in 18 months.

Vi shares gained as much as 1.64% to ₹6.79 after opening flat at ₹6.68 on the BSE on Tuesday. The market capitalisation stood at ₹32,522 crore. In comparison, the BSE Sensex was trading 128 points, or 0.22%, higher at 59,416 levels.

The share price of the debt-laden telecom company has plunged 35% in a year, while it has lost 26% in six months and 4% in a month. On the year-to-date basis (YTD), the stock has fallen nearly 16%. Vi shares touched its 52-week high of ₹11.70 on March 4, 2022, while it slipped to its 52-week low of ₹6.33 on January 27, 2023.  

Vi in an exchange filing on Monday said it allotted 1,200 debentures of the face value of ₹10,00,000 each to ATC Telecom Infrastructure, while the balance 400 debentures will be allotted following receipt of the application form and subscription money.

"It is hereby informed that the capital raising committee of the Board of Directors of Vodafone Idea Ltd. has, at its meetings held today that is Feb. 27, 2023, allotted a total of 12,000 number of unsecured, unrated and unlisted Optionally Convertible Debentures of the face value of ₹10,00,000 each to ATC Telecom Infrastructure Pvt. Ltd.," Vi said in a BSE filing.

On February 25 at the Extra Ordinary General Meeting, the shareholders of Vodafone Idea had granted the approval to issue optionally convertible debentures of up to ₹1,600 crore to ATC by way of special resolution passed at the meeting. As per the voting results, overall 99.99% of the votes were in favour of the resolution.

In January this year, the board of Vodafone Idea had given nod to the allotment of debt securities, which are convertible into equity shares, to ATC in one or more tranches. The raised capital will be used to pay amounts owed by the company to ATC under the master lease agreements and for general corporate purposes.

The OCDs, which are convertible into 1 lakh equity shares of the company at a conversion price of ₹10 per share, carry a coupon rate of 11.2% per annum, payable semi-annually during its term. The maximum OCD term is eighteen months from the date of issue and allotment of the first tranche of OCDs.

This is the second debenture issue by the Vi board as it had first approved the preferential issue of OCDs to ATC at an EGM in November 2022. The company had allotted OCDs worth ₹1,600 crore to ATC on a preferential basis to settle dues.