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MUMBAI:
The minimum amount of Rs 9.96 billion that Reliance Industries
Ltd’s (RIL) Independent Media Trust (IMT) will lend to
ensure the currently open rights issues of Network18 Media
and Investments and TV18 Broadcast sail through will translate
into a 51 per cent stake in the promoter companies of Network18.
IMT
will lend the money through investments in zero coupon optionally
convertible debentures (ZOCDs) issued by the six promoter
companies of Network18, which will be subscribing to promoters’
entitlement in the rights issues and in addition, to subscribing
to the unsubscribed portion in the rights issues and to subscribe
to additional equity shares.
The
six promoter companies are RRB Mdiasoft, RB Mediasoft, RBI
Media Holdings, Watermark Infratech, Colorful Media and Adventure
Marketing, which together own 36.90 per cent of Network18.
To subscriber to their entitlement, these companies require
Rs 9.96 billion. To raise Rs 9.96 billion to subscriber to
their entitlement, the promoter companies will have to issue
a minimum of 99,630,000 ZOCDs.
By
subscribing to their entitlement and unsubscribed portion,
if any, in this Issue, the promoter companies will hold more
than 36.90 per cent of the post-issue paid up equity share
capital of the Issuer.
If
the ZOCD holder opts for conversion of the minimum 99,630,000
ZOCDs, then it will result in the ZOCD holder holding more
than 51 per cent of the promoter companies. In the event of
conversion of the ZOCDs, there will be a change of control
of the subscribing companies. Such change of control of the
promoter companies may in turn result in a change of control
in the company.
Considering
that Network18 is already in control of TV18, the acquisition
of control of Network18 by the ZOCD holder may consequently
result in change of control of TV18. A change of control of
the companies may significantly influence our business, policies,
and operations, Network18 & TV18 have said in the rights
issue prospectus.
Television
channels that are owned by TV18 include news channels CNBC
TV18, CNBC Awaaz, CNN IBN, IBN7 and IBN Lokmat, and general
entertainment channel Colors and factual entertainment channel
History TV18.
The
promoter companies are owned and controlled by Raghav Bahl,
Founder of Network18 group and Ritu Kapur.
Network18
is offering 307 shares for every 50 shares held by its shareholders
at a price of Rs 30 per share, while TV18 is offering 41 shares
for every 11 shares held by its shareholders at a price of
Rs 20 per share.
The
six promoter companies have confirmed vide their letter dated
29 February 2012 that they intend to (i) subscribe for additional
equity shares and (ii) subscribe to the unsubscribed portion
in the rights issue, if any. Such subscription to additional
equity shares and the unsubscribed portion, if any, to be
made by the promoter companies, will be in accordance with
the Takeover Regulations and also shall not result in breach
of minimum public shareholding requirement as stipulated in
the listing agreements, Network18 and TV18 have said.
The
promoter group holding in Network18 is 49.55 per cent, including
11.14 per cent by Network18 Group Senior Professional Welfare
Trust and 0.40 per cent by TV18 Employees Welfare Trust. Network18
group owns 59.76 per cent of TV18.
The
promoter companies each have a paid-up and issued share capital
of Rs 0.1 million comprising 10,000 equity shares of Rs 10
each. As per the ZOCD Investment Agreement, the promoter companies
will issue such number of ZOCDs to IMT to enable them to subscribe
to their entitlement, additional Equity Shares and unsubscribed
equity shares in the Issue with the proceeds of the ZOCDs.
The investment agreement has provided that if the response
to rights issue from non-promoter shareholders is poor, the
promoter companies will subscribe to additional shares and
also to the unsubscribed portion.
TV18
will be acquiring 100 per cent of the equity of Equator, which
owns 100 per cent equity of Panorama, the owner of ETV News
Channels; 50 per cent of Prism which owns ETV non-Telugu channels;
and 24.50 per cent of Eenadu which owns ETV Telugu Channels.
Each
ZOCD to be issued to IMT will be of Rs 100 each convertible
into 10 equity shares of the respective promoter company.
These ZOCDs are also freely transferable. The holder of the
ZOCDs has the option to convert all or any of the ZOCDs into
10 equity shares for each ZOCD held, of the relevant promoter
company at any time within a period of 10 years from the date
of subscription of the ZOCDs by IMT.
Further,
the holder of the ZOCDs has the option to require all or any
of the promoter companies to redeem some or all of the ZOCDs
at par at any time within a period of 10 years from the date
of subscription of the ZOCDs. The ZOCDs which have neither
been converted into equity shares nor redeemed shall be automatically
redeemed at par upon the expiry of 10 years from the date
of subscription of the ZOCDs.
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