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.

MUMBAI: CNN-IBN, the TV18 Broadcast owned English news channel, has appointed Vishal Bhatnagar as National Revenue Head, with immediate effect. He was earlier SVP & Regional Head-North & East, CNBC-TV18 and CNBC Awaaz.

The move is a part of the leadership re-alignment now underway at Network18 News Media, the client facing ad sales unit, which manages the advertising interests of the news and factual entertainment channels at Network18 Group.

As is known, Network18 News Media spearheads the group‘s effort towards consolidating and optimising revenue growth across its six news & factual entertainment channels (CNBC-TV18, CNBC Awaaz, CNN-IBN, IBN7, IBN-Lokmat and History TV18) spanning the full spectrum of general news, business news, regional news and factual entertainment.

Ad sales for the ETV regional news network, subject to regulatory approvals for the acquisition, will also form part of this stable. While acting as a centralised sales agency, Network18 News Media also reflects the group‘s focus on individual brands via dedicated teams and revenue leaders aligned to each channel.

Commenting on the larger re-alignment, Network18 News Media CEO Sanjay Duasaid, "We believe that our brands are well-placed to build further on their leadership, both in terms of innovative client solutions as well as a strong network proposition. Each of our leaders has a proven track record and strong leadership acumen and we‘re confident that this alignment is the beginning of a new phase of growth for us."

Bhatnagar brings with him over 18 years of rich experience in sales across media and has been with the Network18 Group since 2004. He holds degrees in management and commerce from the International Management Institute (IMI) and the University of Delhi.

MUMBAI: Raghav Bahl has taken the next big step to infuse capital into his two debt-laden leading companies and fund the acquisition of Hyderabad-based ETV that would help him spread his media empire into the fast-growing regional markets of India with the support of cash-rich Reliance Industries Ltd (RIL).

After getting the Sebi nod for going ahead with the rights issue, Network18 Media & Investments Ltd and TV18 Broadcast Ltd on Friday fixed the the price of their rights issues at a discount to their closing prices to raise Rs 26.99 billion each.

Network18 is offering 307 shares for every 50 shares at a price of Rs 30 per share, a discount of 5.66 per cent to its closing price of Rs 31.80 on the National Stock Exchange (NSE).

TV18 is offering 41 shares for every 11 shares held at a price of Rs 20 per share, a discount of 4.76 per cent to its closing price of Rs 21 on the NSE.

Since Network18 group owns 59.76 per cent of TV18, the net capital raised from the rights issues will be Rs 43.12 billion.

The funds to be raised from the rights issues are meant for TV18?s acquisition of ETV news and general entertainment channels, except the Telugu GEC from Reliance Industries Ltd (RIL) for Rs 21 billion. RIL will fund the Network18 promoter companies for subscribing to the rights issues and in exchange will get optionally convertible debentures issued by the promoter companies.

RIL will lend a minimum of Rs 17 billion through investments in optionally convertible debentures. If none of the non-promoter shareholders subscribe to the rights issue, RIL will have to lend Rs 43.12 billion to Network18 promoters to ensure both the rights issues go through.

The record date for Network18 shareholders is 12 September and for TV18 shareholders is 17 September. The Network18 rights issue will open on 18 September 18 and close on 4 October, while that of TV18 will open on 25 September and close on 15 October.

Both the issues are huge compared to their market capitalisation as of Friday. Network 18?s rights issue is nearly six times its market capitalisation of Rs 4.61 billion and that of TV18 is nearly 3.5 times the market capitalisation of Rs 7.78 billion.
 

MUMBAI: The path has been cleared for Network18 Media and Investments Ltd and TV18 Broadcast Ltd to raise Rs 27 billion each through rights issues.

The Securities and Exchange Board of India (Sebi) gave its observations on 17 August on the draft offer documents filed by Network18 and TV18 in March 2012. The companies now are required to go ahead with their rights issues within a year from the date of the observations.

Observations by Sebi are conveyed after the regulator seeks any clarifications it requires from the issuer. This basically allows a company to go ahead with its issue but is not a clearance or approval of the issue.

The funds are proposed to be raised for TV18?s acquisition of ETV news and general entertainment channels, except the Telugu GEC from Reliance Industries Ltd (RIL) for Rs 21 billion. RIL will fund the Network18 promoter companies for subscribing to the rights issues and in exchange will get optionally convertible debentures issued by the promoter companies.

The promoter companies of Network18 will need to invest Rs 17 billion to subscribe to their portion of the rights issue. The Network18 group has undertaken to subscribe to any unsubscribed portion of the rights issue in either of the companies.

RIL will lend a minimum of Rs 17 billion in the debentures. If none of the non-promoter shareholders subscribe to the rights issue, RIL will lend Rs 40 billion to Network18 promoters to ensure both the rights issues go through.

Since Network18 owns 50 per cent of TV18, the net capital raised from the rights issues will be Rs 40 billion.