The Essar Group has said that it has not changed its plan to merge Essar Telecom Holding Private Limited with listed group firm India Securities Limited (ISL) in order to determine valuation of its stake in Vodafone-Essar, according to news reports. It added that the investment banks should decide whether to include or exclude this while determining the valuation.
The company also declined to comment on whether it has appointed the investment banker. These comments come after news reports had said that the Essar Group had scrapped its plans to inject part of its 33 per cent stake in Vodafone Essar into a listed shell company. Instead, it was said that the partners (the Essar Group and Vodafone) had agreed to appoint two investment banks to value the stake in Vodafone Essar, as a precursor to the Essar Group deciding whether to sell it to Vodafone.
Prior to this, the Essar Group was planning to inject 11 per cent of its stake into Indian Securities (ISL), a listed company it controls. It argued this would reveal its true value. Vodafone saw this as an attempt to artificially inflate the stake?s value as a precursor to selling it, arguing that ISL was a highly illiquid vehicle.
When Vodafone acquired a 67 per cent stake in Vodafone Essar for $11.1 billion in 2007, it gave the Essar Group Essar a put option over its 33 per cent stake. The first one allows the Essar Group to sell the entire stake to Vodafone for $5 billion.
Meanwhile, it is believed that the Essar Group has also postponed its plans to sell its 7,000 towers across seven circles until this issue is resolved.
