Viom Networks has offered to buy out GTL Infrastructure for Rs 75 billion. It is believed that a mismatch in valuation has prompted both companies to hold discussions, as GTL promoters are looking at valuations of over Rs 105 billion (excluding its debt).
Also, prior discussions between the two had not made any headway, as Viom was not keen on the merger option being proposed by various banks.
SBI Capital Markets is advising Global Group, the parent company of GTL and GTL Infrastructure, on the possible sellout or stake dilution. GTL’s debt is estimated to be around Rs 140 billion.
Moreover, Viom’s offer to GTL is believed to be subject to two conditions. First, the Global Group must reduce its debt in its tower arms to about Rs 75 billion post the restructuring. Viom feels that GTL cannot sustain a higher debt, based on its current cash flows.
Also, Viom has said that its offer is valid only for a limited period, as it shares the view that its competitor’s valuations will erode further if the company fails to meet its service level agreements with respect to its clients.
