Journalist-turned-entrepreneur Raghav Bahl has officially parted ways with the company he founded after it was announced on Thursday that Reliance Industries (RIL) will acquire control of Network18 Media and Investments and TV18 Broadcast.
In this process, Bahl and his wife Ritu Kapur will make R707 crore personally for divesting their entire stake in the six holding firms through which he held his stake in Network18 to RIL, an open offer document filed by RIL for the outstanding equity of Network18 shows.
According to this document, the total consideration for the transaction by which RIL will gain a 71.25% stake in Network18 and a direct stake of 3.96% in TV18 stands at R3,266.78 crore. RIL will also gain majority control of TV18 in the process as Network18 is its largest promoter shareholder.
Out of this consideration, RIL had already invested R2,211.80 crore by way of subscription to the 10-year, zero-coupon optionally convertible debentures in these six holding companies in 2012, when RIL — through an entity called Independent Media Trust (IMT) — first invested in Network18. This money was used by the promoters of Network18 and TV18 to capitalise these firms by subscribing to rights issues. These companies, in turn, used this money to acquire channels from Hyderabad-based Eenadu Television (mostly owned by RIL) and retire debt.
From the remaining consideration, Bahl and his wife will get R707 crore for their stakes in seven holding companies that own Network18 and TV18, and another R348.02 crore will be given to these holding companies to repay certain outstanding liabilities.
JM Financial, which is running the mandate for IMT’s open offer to the shareholders of Network18, said in the public announcement filed with the bourses on Thursday night that IMT, along with Reliance Industries Ltd and Reliance Industrial Investments and Holdings would launch an open offer for 22.99 crore shares of Network18 (21.96%) of the firm’s outstanding equity) that are publicly held at present at a price of R41.04 per share.
The open offer price values Network18 at R4,295 crore.
On Thursday, RIL announced that IMT would be acquiring control of Network18 and that the oil-to-yarn and retail conglomerate would be capitalising it by up to R4,000 crore to conduct the necessary transaction.
On Friday, share prices of Network18 surged on the bourses. Network18’s share price rose 19.93% on the BSE to close at R54.15 per share. RIL’s open offer for Network18’s shares may not attract much attention from