The Essar group has decided to exit its joint venture with Vodafone in the country, say news reports. Essar has 33 per cent stake in the joint venture.
A press release from Vodafone said, “The Vodafone Group announces that the Essar Group has exercised its underwritten put option over 22 per cent of Vodafone Essar Limited (‘VEL’).?
A put option gives an investor the right to sell stocks at a specified price within a specified time. Essar has used the put option to sell its 22 per cent (out of the 33 per cent) stake to Vodafone. In turn, Vodafone exercised its call option on the remaining 11 per cent stake. The entire transaction would be worth $5 billion.
?Following the exercise by the Essar Group of its put option, Vodafone has exercised its call option over the remaining 11 per cent of VEL owned by the Essar Group resulting in a total cash payment of $5 billion. The final settlement is anticipated to be no later than November 2011.Vodafone Group’s published net debt figure already includes this $5 billion,” Vodafone said.
