In a filing to the Bombay Stock Exchange (BSE), the Essar Group has said that Vodafone could not object to its plans to merge Essar Telecommunications Holdings Private Limited (ETHPL) (which has 11 per cent stake in Vodafone-Essar), with India Securities Limited (ISL). This, the company stated, was because Vodafone was neither a shareholder nor a creditor of either ETHPL or ISL.
Prior to this, Vodafone had told the Securities and Exchange Board of India (SEBI) and the Bombay Stock Exchange (BSE) that it was not informed about its partner Essar’s plans to transfer 11 per cent stake to another listed group firm.
In a statement, the company had said that it has written to both BSE and SEBI expressing its concerns regarding the reverse listing of Essar Telecommunications Holdings Private Limited (which owns an indirect 11 per cent stake in Vodafone Essar) into India Securities Limited and had requested a thorough scrutiny. In 2007, Vodafone had acquired nearly 67 per cent stake in the company, while Essar has a little over 33 per cent equity in the joint venture.
India Securities Limited (ISL) is a group firm of Essar and is listed on the bourses. Transfer of 11 per cent stake held by Essar Telecommunications Holdings to ISL will allow shareholders of ISL to participate in Vodafone Essar.
If carried through, Essar would know the fair (market) value of its 33.02 per cent stake, for which the company has the right to exercise the put option, a contract that gives the seller the right to sell a specified quantity of securities at an agreed price within a specified time period.
