Shares of Vodafone Idea (VIL) on Tuesday tumbled nearly 19% after the debt-ridden firm announced converting about ₹16,000 crore interest dues liability payable to the government into equity.
The stock tanked 18.85% to ₹12.05 on both the BSE and NSE.
VIL has decided to opt for converting about ₹16,000 crore interest dues liability payable to the government into equity which will amount to around 35.8% stake in the company, as per a regulatory filing of the telecom firm.
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If the plan goes through, then the government will become the biggest shareholder in the company which is reeling under a debt burden of about ₹1.95 lakh crore.
The government has given telecom operators an option of paying interest for the 4 years of deferment on the deferred spectrum instalments and AGR dues by way of conversion into equity of the NPV of such interest amount.
VIL said that since the average price of the company's shares at the relevant date of August 14, 2021 was below par value, the equity shares will be issued to the government at par value of ₹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% of the total outstanding shares of the company, and that the promoter shareholders would hold around 28.5% (Vodafone Group) and around 17.8% (Aditya Birla Group), respectively," the filing said.
