Market regulator Sebi on Wednesday exempted the government from making an open offer to shareholders of Vodafone Idea Ltd (VIL) in line with its plan to acquire more than 33% of the telecom operator's capital in a share-to-equity conversion. In a nine-page injunction, Sebi said it is proposing that the Government of India (GoI) take over the stake in VIL for the sole purpose of salvaging the general public interest.
“Furthermore, the Government of India does not intend to participate in the management or board of the VIL and there will be no change of control over the VIL. Furthermore, such participation in the Government of India is classified as a public participation.” Sebi said in making the waiver to make the open offer.
The regulator found that VIL has to pay a significant amount of money to the government, which could potentially weigh on the company's finances.
In addition, an open government tender obligation means huge sums of money are leaving the Indian government, S.K. Mohanty, the permanent member of Sebi, said in an executive order.
He also mentioned the public order and public interest involved in the whole transaction and discussed various measures taken by the Government of India to facilitate liquidity and cash flow of telecom service providers and to help various banks that operate in the telecom sector on a significant scale are. Sector.
Citing those reasons, he said, "I believe it appropriate to grant the acquirer an exemption from the open offer requirements as set out in the ... Acquisition Rules."
Under the rules, companies that acquire a 25% stake or more in a public company must make an open offer to the company's shareholders.
As part of the bailout of the indebted telecom sector, the government last September gave telecom operators a chance to pay interest on the 4-year deferral of AGR's deferred spectrum and license fees by converting shares into equity.
As part of the government bailout program, VIL decided to convert debt into equity.
On May 10, VIL filed an open offer waiver application for the government to acquire a stake in the company.
After the transaction, GoI would hold a 33.44% stake in the telecom operator.
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