The Department of Telecommunications (DoT) has objected to Tata Communications? proposal to increase public holding in the company from 16.85 per cent to over 25 per cent.
DoT feels that no dilution of stake can take place, until the dispute over hiving off of company’s surplus land is resolved. Also, DoT does not want to support any activity that will result in the government’s shareholding in the company falling below 26 per cent.
Prior to this, Tata Communications had written to DoT seeking permission to offload equity stake to the public to meet the stipulations under the Securities Contracts (Regulation) Rules.
The Rules, amended in 2010, requires all listed private companies to have a minimum 25 per cent public holding before June 2013. Tata Communications had given three options to meet the requirement, including issuing additional shares to the public through a fresh offer, offering shares held by the promoters through the secondary market or offering shares held by the promoters through a private placement or rights issue.
Currently, the Tata Group holds 51 per cent stake in the company, the government owns 26 per cent and the Bank of New York Mellon holds just under 7 per cent as custodian to the company’s ADR issue.
While presenting the application to DoT, Tata Communications also said that the company was in urgent need of shareholders’ funding and wanted to increase authorised capital of the company from Rs 3 billion to Rs 20 billion.
