MTNL fundraising: Shareholder's approval sought for issue of debentures

 

HIGHLIGHTS

• MTNL has aksed shareholders' nod for raising up to Rs 6,500 crore through non-convertible debentures (NCDs).
• Apart from fundraising, MTNL also seeks to monetize land and buildings.
• The government has also recently approved a Rs 69,000-crore revival package for BSNL and MTNL.

 

State-owned MTNL on Wednesday said it will seek shareholders' nod for monetization of land and buildings as well as for raising up to Rs 6,500 crore through non-convertible debentures (NCDs). Mahanagar Telephone Nigam Ltd (MTNL) said the company's extraordinary general meeting will be held on January 8, 2020, in this regard.

The company would seek shareholders' approval for the issue of non-convertible redeemable non-cumulative preference shares (NCRNCPS) on a private placement basis to the government towards payment of 4G spectrum cost. "...approval of the members be and is hereby accorded to authorize the board...to offer or invite or invite subscriptions for government-guaranteed, unsecured, listed, redeemable non-convertible debentures in the nature of bonds (NCDs), in one or more series/tranches, aggregating up to Rs 6500 crores on private placement basis..." it said.

Approval is also being sought for monetization of land and buildings as specified/identified by its board in line with the Department of Investment and Public Asset Management (DIPAM) guidelines and as per revival plan of the company approved by the Union Cabinet recently. The consent of the shareholders is also being sought for opening an escrow account for "ring-fencing the proceeds from the monetization of assets for use by the company under revival/restructuring plan".

Another item pertains to the monetization of towers and fiber assets, including leasing, after considering the market conditions with an aim to "maximize returns as per the revival plan of the company". MTNL plans to issue non-convertible redeemable non-cumulative preference shares (NCRNCPS) on a private placement basis to the government towards the payment of spectrum cost of 4G. This entails allotment of up to 62.95 crore preference shares of the face value of Rs 100 each fully paid-up at par at an issue price of Rs 100 aggregating to Rs 6,295 crore.

The government recently approved a Rs 69,000-crore revival package for BSNL and MTNL that includes merging the two loss-making firms, monetizing their assets and giving voluntary retirement scheme (VRS) to employees so that the combined entity turns profitable in two years. The companies have already announced VRS schemes and as per official estimates, 78,569 employees of BSNL and 14,387 employees of MTNL have opted for VRS.

(With inputs from agencies.)