Vodafone Sells 18% Stake in Indus Towers: Here's Why

"Vodafone has been trying to refinance large outstanding loan for which it had received ultimatum from lenders while simultaneously negotiating with lenders for extension of repayment deadline," sources revealed.

One of main causes of UK's Vodafone Group PLC's Wednesday sale of its Indus Towers investment was ongoing pressure from lenders regarding unpaid loan that was taken out around five years ago. group of foreign banks, led by BNP Paribas, HSBC, & Bank of America among others, refused to extend tenor & demanded full repayment of loan, which had been raised against Vodafone PLC's 21.05% stake in Indus Towers in order for it to participate in Vodafone Idea's rights issue, according to people with access to internal discussions between Vodafone Group & its lenders. This is reportedly how things escalated.

Vodafone declared on Wednesday that it has sold 18% share for €1.7 billion (about ₹ 15,300 crore) at Indus Towers.
Majority of earnings, according to business, will be used to pay back €1.8 billion in outstanding bank loans that are secured by Vodafone's Indian assets. Through accelerated book-build offering, Vodafone Group PLC sold 484.7 million shares of Indus Towers, or 18% of company's share capital, in series of block agreements.

"Placing raised ₹ 15,300 crore (€1.7 billion) in gross proceeds, which will be used to substantially repay Vodafone's existing lenders concerning outstanding bank borrowings of €1.8 billion secured against Vodafone's Indian assets," it stated.

According to information from stock exchanges & sources who spoke with Moneycontrol, number of domestic & international institutional investors, including Norges Bank, Jane Street, SBI Mutual Fund, & Millennium Funds, bought shares of telecom tower operator Indus Towers from global telecom major Vodafone PLC. On Wednesday, Bharti Airtel increased its ownership in Indus Towers from 47.95% to 48.95% by purchasing roughly 26.95 million shares, or around 1% of company.

According to someone with firsthand knowledge of internal discussions, "Vodafone has been negotiating with lenders for extension for repayment deadline." source continued, "At same time, there was attempt to refinance loan—either whole or in part—but it was unsuccessful.

"Divesting stake was ultimately only option, but waiting little longer would have allowed company to realize much higher value from deal." However, in case of further delay in repayment, lenders had started making arrangements to "call loan," individual continued.

To Summarize

Vodafone Group sold its 18% stake in Indus Towers for €1.7 billion (₹ 15,300 crore) to repay €1.8 billion loan. sale was prompted by lender pressure, as banks led by BNP Paribas, HSBC, & Bank of America demanded full repayment, rejecting extensions & refinancing efforts.