A big loser and making a lot of noise today is Vodafone Idea. The stock opened almost 10% lower at Rs.13.40 and went down to an intraday low at Rs.12.05, a fall of 19%, not too far from its 20% LC of the day at Rs.11.90.
The stock price fell after the company’s board approved conversion of adjusted gross revenue (AGR) and spectrum liabilities into equity.
The Net Present Value (NPV) of this interest is expected to be about Rs 16,000 crore as per the company’s best estimates, subject to confirmation by the Department of Telecommunications (DoT).
Since the average price of the company’s shares at the relevant date of 14.08.2021 was below par value, the equity shares will be issued to the Government at par value of Rs 10 per share, subject to final confirmation by the DoT. The conversion will therefore result in dilution to all the existing shareholders of the company, including the Promoters.
Following conversion, it is expected that the Government will hold around 35.8 per cent of the total outstanding shares of the company, and that the Promoter shareholders would be around 28.5 per cent (Vodafone Group) and around 17.8 per cent (Aditya Birla Group), respectively.