Essar group company ETHL Communications Holdings repaid loans worth Rs 42.3 billion ahead of their due date to free the 10.97 per cent stake it holds in the joint venture with Vodafone Group PLC, say news reports.
It is believed that pre-payment of the loan will provide Essar with more options to use the 11 per cent stake in Vodafone Essar. It may even make the reverse merger process simpler, as Essar would no longer need to get approval from the bond holders.
ETHL Communications had raised the funds in the form of non-convertible debentures on the back of the value of the 11 per cent Vodafone Essar stake held in the company. The Essar group holds 33 per cent in Vodafone Essar. The Essar group holds 22 per cent offshore while the rest of its
Vodafone Essar stake is held domestically in ETHL Communications. Essar had already moved the Madras High Court for an approval to merge ETHL Communications with another listed group company, India Securities. This would have given equity investors a backdoor entry to investing in unlisted Vodafone Essar.
Essar has to exercise a pre-agreed option with Vodafone Group to tender its 33 per cent for $5 billion, or a part of the stake at a market determined value before May 2011.
