To clear dues with network vendors, Nokia and Ericsson, Vodafone Idea announced on Thursday that it is going to allot them shares on a preferential basis. Vodafone Idea informed the exchanges on June 13 that its board has approved the issuance of about 166 crore shares at ₹14.80 per share to raise funds up to ₹2,458 crore on a preferential basis. 

In a regulatory filing, Vodafone Idea said that it will allot 102.7 crore shares aggregating to ₹1,520 crore to Nokia Solutions and Networks India, and the remaining 63.37 crore shares aggregating to ₹938 crore to Ericsson India.

The board also approved the convening of an extraordinary general meeting of the company on 10 July, inter-alia, to approve the above matters, VIL added.

Higher by 35 pc

This preferential allotment price is higher by about 35 percent than the FPO price and comes with a lock-in of 6 months, it said.

Post this preferential issuance, the shareholding of Nokia and Ericsson in the Vodafone Idea will be 1.5 percent and 0.9 percent, respectively.  The Promoter (ABG and Vodafone) shareholding will stand at 37.3 percent and shareholding of Indian government will stand at 23.2 percent, while the balance 37.1 percent will be public shareholding.

Vodafone Idea has already raised ₹18,000 crore in equity through a follow on public offer it conducted in April. In addition to this, it has received in-principle approval from a consortium of banks including the State Bank of India for an in-principle amount of ₹14,000 crore. According to Vodafone Idea’s red herring prospectus these funds raised through debt and equity are exclusively for network expansion and not for the clearing of dues. 

Commenting on equity allotment to Nokia and Erricson, Akshaya Moondra, CEO, Vodafone Idea Limited said, “As VIL embarks on its growth journey, support from key stakeholders is critical and the agreement with Nokia and Ericsson reaffirms these vendors as long-term partners of the company, and sets the stage for the next phase of our growth.”

Last month, VIL reported widening of losses to ₹7,675 crore in the March quarter amid rise in interest and financing cost.