TIDMVOD
RNS Number : 9512A
Vodafone Group Plc
04 January 2018
4 January 2018
VODAFONE INDIA AND IDEA MERGER UPDATE
Idea Cellular Limited (NSE: IDEA) ("Idea") announced today the
intention to raise up to INR67.5 billion (EUR882 million)(1) of
equity. This will be achieved through a INR32.5 billion (EUR425
million) preferential allotment to the Aditya Birla Group entities
("ABG") and Idea's Board has also formed a committee which will
evaluate the best option for raising up to an additional INR35.0
billion (EUR457 million) of equity through a further preferential
allotment, qualified institutional placement, rights issue or such
other route that Idea's Board determines is in Idea's best
interest. The proceeds from this capital raise, in addition to the
INR78.5 billion (EUR1.0 billion) of proceeds from the announced
disposals of Vodafone India's and Idea's standalone tower
businesses, will be used to strengthen the balance sheet of the
merged entity (Vodafone India and Idea).
ABG will increase its ownership in Idea from approximately 42%
to approximately 47%, on a fully diluted basis(2) , after the
preferential allotment. ABG's ownership may change further
depending on the form, size and result of the second tranche of the
capital raise.
As a consequence of the change in shareholding in Idea following
the capital raise, ABG and Vodafone have agreed that ABG will buy a
minimum of 2.5% of the merged entity from Vodafone, or such higher
stake required in order for ABG to ultimately own at least 26% of
the merged entity(3) . Consequently, Vodafone will receive minimum
proceeds of INR19.6 billion (EUR256 million) from such sale and
Vodafone's ownership in the combined entity is expected to be
approximately 47.5% at completion. The aforementioned changes to
the capital structure were already contemplated in the scheme of
arrangement for the merger. Vodafone's stake in the combined entity
in excess of 45.1% will not be subject to any lock-up after closing
and Vodafone will be free to sell the relevant shares without
restrictions.
As per the agreement entered into on 20 March 2017, Vodafone
India's contribution of net debt to the merged entity and Vodafone
Group's funding requirement will be dependent on Idea's net debt at
completion of the merger, as well as customary closing adjustments,
but is not affected by proceeds received in relation to the
announced disposals of Vodafone India's and Idea's standalone
towers and a potential monetisation of Idea's 11.15% stake in Indus
Towers. Vodafone will contribute INR24.8 billion (EUR323 million)
more net debt than Idea at completion.
Illustratively, based on Idea's net debt as at 30 September
2017(4) of INR567.6 billion (EUR7.4 billion) adjusted for (i) the
INR32.5 billion (EUR425 million) preferential allotment announced
today, and (ii) the additional equity raise of up to INR35.0
billion (EUR457 million) being evaluated by Idea's Board, Vodafone
India's net debt contribution would have been INR524.8 billion
(EUR6.9 billion). Given Vodafone India's net debt position of
INR618.3 billion (EUR8.1 billion) as at 30 September 2017, this
would have implied a need for INR93.5 billion (EUR1.2 billion) of
additional equity funding by Vodafone Group. After taking into
account the minimum proceeds to be received by Vodafone from the
sale of a minimum of 2.5% of the combined entity to ABG at
completion, the net funding contribution by Vodafone Group would
have been INR73.9 billion (EUR1.0 billion)(5) (please refer to the
table below for further details).
CCI approval has been granted and the scheme has been approved
by the shareholders and creditors of both Idea and Vodafone India,
with the NCLT and DOT approvals pending. As such, Vodafone and Idea
now expect the merger to be completed during the first half of
calendar 2018.
Illustrative Vodafone India net debt contribution and Vodafone
Group funding requirement based on Idea's net debt as at 30
September 2017(5)
As at 30 September 2017 INR million EUR million
--------------------------------------- --------------- ------------
Vodafone India actual net debt
(i) 618,333 8,079
--------------------------------------- --------------- ------------
Idea net debt(4) 567,568 7,415
--------------------------------------- --------------- ------------
Announced preferential allotment (32,500) (425)
--------------------------------------- --------------- ------------
Further capital raise to be evaluated Up to (35,000) Up to (457)
by the Board of Idea
--------------------------------------- --------------- ------------
Additional net debt contributed
by Vodafone India 24,758 323
--------------------------------------- --------------- ------------
Vodafone India net debt contribution
(ii) 524,826 6,857
--------------------------------------- --------------- ------------
Minimum 2.5% stake purchase in
the merged entity by ABG (iii) 19,605 256
--------------------------------------- --------------- ------------
Vodafone Group funding requirement
(i) - (ii) - (iii) 73,903 966
--------------------------------------- --------------- ------------
Except as described in this announcement, there has been no
significant change (as defined in Listing Rule 10.4.2(3)) affecting
any matter contained in the original announcement of the merger
made on 20 March 2017 and no other significant new matter has
arisen which would have been required to be mentioned in that
original announcement if it had arisen when the original
announcement was released.
This announcement contains inside information for the purposes
of Article 7 of EU regulation 596/2014.
- ends -
About Vodafone
Vodafone Group is one of the world's largest telecommunications
companies and provides a range of services including voice,
messaging, data and fixed communications. Vodafone Group has mobile
operations in 26 countries, partners with mobile networks in 50
more, and fixed broadband operations in 19 markets. As of 30
September 2017, Vodafone Group had 522.8 million mobile customers
and 18.8 million fixed broadband customers, including India and all
of the customers in Vodafone's joint ventures and associates. For
more information, please visit: www.vodafone.com
About Idea Cellular Limited
Idea Cellular is the third largest wireless operator in India
with a Revenue Market Share of 16.2% (Q2FY18). Idea is listed on
the National Stock Exchange (NSE), and the Bombay Stock Exchange
(BSE) in India. Idea is part of the Aditya Birla Group, which is
one of the largest business groups in India. The Aditya Birla Group
is a conglomerate with operations in more than 35 countries and has
businesses in, among others, mobile telecommunications, metals and
mining, cement, carbon black, textiles, garments, chemicals,
fertilizers and financial services industries.
More information on Idea Cellular is available at
www.ideacellular.com and on the Aditya Birla Group at
www.adityabirla.com
Notes
1. Based on INR / EUR FX rate of 76.54 as at 3 January 2018
2. Fully diluted shares as per the transaction announcement on 20 March 2017
3. On 20 March 2017 Vodafone announced that ABG was going to
acquire a 4.9% stake in the merged entity from the shareholders of
Vodafone India for INR39 billion (EUR506 million) at completion, in
order to reach a shareholding of 26% in the merged entity
4. Idea net debt as at 30 September 2017 including certain
pro-forma adjustments at the time of the merger announcement as per
transaction definitions
5. The net funding requirement for Vodafone Group at completion
will change based on a number of factors including but not limited
to: (i) the amount of net debt in Idea and Vodafone India at
completion, (ii) the amount of capital raised by Idea, (iii)
customary closing adjustments including working capital, and (iv)
the size of the stake in the merged entity acquired by ABG from the
shareholders of Vodafone India. Such net funding requirement is not
affected by proceeds received in relation to the announced sale of
Vodafone India's and Idea's standalone towers or a potential
monetisation of Idea's 11.15% stake in Indus Towers
Enquiries:
Vodafone
Investor Relations Tel: +44 (0) 7919 990
Media Relations 230
www.vodafone.com/media/contact
Person responsible
The person responsible for arranging the release of this
announcement on behalf of Vodafone is Rosemary Martin, Group
General Counsel and Company Secretary (Tel: +44 (0)1635 33251).
Disclaimer
Certain information contained in this document constitutes
"forward-looking statements", which can be identified by the use of
terms such as "may", "will", "should", "expect", "anticipate",
"project", "estimate", "intend", "continue", "target" or "believe"
(or the negatives thereof) or other variations thereon or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. Such statements
express the intentions, opinions, or current expectations of the
parties with respect to possible future events and are based on
current plans, estimates and forecasts, which the parties have made
to the best of their respective knowledge, concerning, among other
things, the respective business, results of operations, financial
position, prospects, growth and strategies, statements regarding
the transaction and the anticipated consequences and benefits of
the transaction, and the targeted closing date of the transaction.
Due to various risks and uncertainties, actual events or results or
the actual performance may differ materially from those reflected
or contemplated in such forward-looking statements.
Such risks and uncertainties include, but are not limited to,
regulatory approvals that may require acceptance of conditions with
potential adverse impacts; risks involving the parties' respective
ability to realise expected benefits associated with the
transaction; the impact of legal or other proceedings; and
continued growth in the market for telecommunications services and
general economic conditions in the relevant market(s).
Furthermore, a review of the reasons why actual results and
developments may differ materially from the expectations disclosed
or implied within forward-looking statements can be found:
-- under "Forward-looking statements" and "Principal risk
factors and uncertainties" in the Vodafone Group Plc's annual
report for the year ended 31 March 2017; and
-- under "Other Information - Forward-Looking Statements" in
Vodafone Group Plc's Half-year Results for the six months ended 30
September 2017.
No assurances can be given that the forward-looking statements
in this announcement will be realised. As a result, recipients
should not rely on such forward-looking statements. Subject to
compliance with applicable law and regulations, the parties
undertake no obligation to update these forward-looking statements.
No representation or warranty is made as to the reasonableness of
such forward-looking statements. No statement in this document is
intended to be nor may be construed as a profit forecast or
estimate for any period. Actual results could differ materially
from those expressed or implied.
This press release is for information purposes only and is not
intended to and does not constitute, or form part of, any
invitation or offer to sell, dispose, acquire, purchase or
subscribe for any securities of any companies mentioned herein in
any jurisdiction, whether pursuant to the transaction or otherwise.
This document shall not be distributed or used by any person or
entity in any jurisdiction where such distribution or use would be
contrary to applicable law or regulation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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January 04, 2018 04:06 ET (09:06 GMT)
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