OCDs are a type of debt instrument issued by companies. The OCDs carry an option for the holder to convert them into equity shares at a predetermined price. Essentially, they combine features of both debt and equity.
ATC India requested Vi to convert the remaining 1,600 OCDs (out of the 16,000 originally issued) into equity shares. Vi agreed to convert these OCDs into 160 million fully paid equity shares, resulting in a tiny 0.2% stake for ATC India.
Vi had issued 16,000 Optionally Convertible Debentures (OCDs) to the American Tower Company (ATC) against the amount it owed to the telecom infrastructure company. Of these, 14,400 OCDs have already been converted into equity shares. This stake was sold by ATC India at an average price of Rs 12.78 per share. Thereafter, ATC had requested the conversion of the remaining 1,600 OCDs into equity shares as well. This move aims to reduce Vodafone Idea's debt and strengthen its financial position.
Earlier, Vi shareholders approved a preferential issue of OCDs to Nokia and Ericsson, further aiding the telco's financial stability.
This move strengthens the financial position of Vodafone Idea and aligns with its strategic goals. ATC India is a tower infrastructure company that provides services to telecom operators. By converting ATC India's debt into equity, Vodafone Idea may enhance its operational capabilities and reduce financial burden
By converting debt to equity, Vi reduces its outstanding debt obligations. The converted OCDs no longer represent a liability on Vi's balance sheet. However, Vi's overall debt position remains substantial, with total debt estimated at around ₹2,07,630 crore as of March 31, 2024.
About ATC India, it is one of the leading independent Passive Telecom Infrastructure Providers in India. ATC India, an indirectly-held subsidiary of American Tower Corporation (NYSE: AMT), launched operations in India in 2007. The company's portfolio has expanded to approximately 75,000 Towers across the country.
ATC India builds telecom sites and provides colocation opportunities for all major Mobile Network Operators (MNOs). Their towers support the networks of almost all mobile service providers, enhancing coverage and capacity.
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