Network 18 Media’s new promoter companies have acquired Rs 200 crore of secured optionally fully convertible debentures (SOFCDs) of the company. The transaction is part of a restructuring exercise that would lead to a three-way deal between Reliance Industries, the Network 18 group and Eenadu, inked in January.
Four new promoter group entities — Watermark Infratech, Colourful Media, Adventure Marketing and RB Media — together acquired 12.46 million SOFCDs of Rs 160.50 each, according to a regulatory filing. The four entities, which acquired 3.115 million debentures each, are among six new companies that would hold promoter group shares on behalf of Independent Media Trust, which was formed by Reliance Industries to route its investments into the media company.
According to the filing dated August 17, the companies that acquired the shares and convertibles had given “an undertaking not to exercise the conversion option of the SOFCDs into equity shares during the conversion period of 18 months from the date of issue." The filing stated they also agreed not to transfer these instruments, adding Network 18 Media had 18.69 million SOFCDs — equivalent to 12.75 per cent of the company's diluted share capital.
The remaining SOFCDs are held by RB Holdings, the original promoter group entity, which held 25.14 per cent stake in the company. Following the restructuring exercise that began this month, RB Holdings lost its equity shareholding. However, it continues to hold about 6.2 million SOFCDs, or 4.25 per cent stake.
In March 2009, the Network18 Media board had cleared a preferential allotment of SOFCDs worth Rs 200 crore to RB Holdings, a company entirely owned by Raghav Bahl and other promoters. “These SOFCDs would be converted into 18.18 million underlying shares of Network18 at the rate of Rs 110 per share, a premium of over 50 per cent to the company's current market price, within 18 months from the date of allotment,” a company release had stated.