Idea Cellular Ltd, the country's third largest mobile services company, on Thursday unveiled a plan to raise Rs 6,750 crore ahead of its merger with Vodafone's local unit. As part of the plan, Idea will raise Rs 3,250 crore by selling 326.6 million shares on a preferential basis to companies controlled by its parent Aditya Birla Group at Rs 99.5 apiece.
The deal will increase Aditya Birla Group's stake in Idea to 47.2 per cent from 42.4 per cent at present. Idea further intends to raise up to Rs 3,500 through the sale of shares. The options include a rights issue, preferential issue or a share sale to institutions, the company said in a statement.
In a separate statement, Vodafone Group said that as a consequence of the change in shareholding in Idea following the raising of capital, the two parties have agreed that ABG will buy a minimum of 2.5 per cent of the merged entity from Vodafone for Rs 1,960 crore. In March last year, Idea and Vodafone announced a merger deal to potentially create the biggest Indian phone carrier. The deal is expected to close this year.
Aditya Birla and Vodafone will eventually own an equal share of the joint venture, the companies said last year.Vodafone said in a filing on Thursday it expected the merger deal to be completed during the first half of this year. The Aditya Birla Group will then own 26 per cent of the combined company and Idea's other shareholders will own the remaining 28.9 per cent.
The 2.5 per cent equity sale transaction between Vodafone and ABG, following change in shareholding pattern of Idea, will reduce funding requirement on Vodafone Group from Rs 9,350 to Rs 7,390 crore to meet debt arrangement for the merged entity.