India Securities(ISL), which has proposed to merge Essar Telecommunications with it, said on Wednesday that the two companies have extended the last date to obtain the necessary approvals for the deal to September 30. ISL informed the Bombay Stock Exchange (BSE) that in view of clause 21.1 of the Scheme of Amalgamation of Essar Telecommunications Holdings (ETHL), the board of directors of the company and ETHL, at their meeting held on March 29, 2011 extended the last date for obtaining all requisite approvals.
It may be recalled that Essar had sought legal permission from the Madras High Court to merge unlisted ETHL, which owns an 11% stake in Vodafone Essar, with the listed ISL. The next hearing is scheduled for April 1. The last hearing was held on March 25 at which both Vodafone and India Securities presented their respective cases. Vodafone is understood to have requested that SEBI be a party to the reverse merger case.
Also,Vodafone had objected to its Indian partner Essar?s plan to value the stake held in India?s third largest mobile phone by subscribers Vodafone Essar. The world?s largest telecom firm by revenue had primarily objected on the grounds that it does not want a company, in which it holds a majority interest, to become the subject of a ?false? market.
?Vodafone is concerned that the value of ISL could be misinterpreted as a fair market value of Essar,? the company had observed in a statement. Essar has the option of selling the 33% stake that it holds in Vodafone Essar for at least $5 billion and is also permitted to sell smaller stakes, at an independently appraised fair market value.
Meanwhile, on March 21, 2011, ETHL said that it had decided to foreclose non-convertible bonds worth R4,230 crore by exercising the call option. As a result ,the 11% equity stake that it holds in Vodafone Essar, became free of all encumbrances. The bonds were raised in January 2010, with the Vodafone Essar stake as collateral and were to mature on July 22, 2011 and December 7, 2011.
