/Voda Idea pays Rs 2,900 cr towards NCD maturities

Voda Idea pays Rs 2,900 cr towards NCD maturities

Kolkata & Mumbai: Vodafone Idea has made interest and maturity payments of around Rs 2,900 crore towards non-convertible debentures (NCDs) which matured on Friday (July 10), company executives familiar with the matter told ET, signalling that it intends to ensure there are no defaults in the lead up to a critical Supreme Court hearing on the adjusted gross revenue (AGR) case in the third week of July.

“Vodafone Idea has on Friday made full payment to all NCD bond-holders, including Franklin Templeton,” a top company executive told ET.

Franklin Templeton MF was among the entities to have received full repayment on account of securities held in Vodafone Idea, getting Rs 1,253 crore as full and final payment for this security.

Franklin Templeton had segregated these securities of Vodafone in six debt schemes in January and since these are segregated units and not part of core portfolio, money received will be paid out to unitholders in full.

“The amount will be distributed to unitholders of the segregated portfolio. This is the full and final payment for this segregated portfolio and will be made by extinguishing all the outstanding units held by each unitholder therein,” Franklin Templeton said in a note to investors. A spokesperson from Nippon India Mutual Fund confirmed the development.

Erstwhile Vodafone India had originally floated the NCDs back in June 2015, before its merger with Idea Cellular in August 2018. Subsequently, the telco had repurchased 6,250 NCDs (aggregating Rs 625 crore) out of the 35,000 units originally issued in FY16, with an option to re-issue the same. Accordingly, the net payment due on July 10 maturity was around Rs 2,875 crore.

A VIL spokesperson also dismissed a news report about the telco defaulting on payments to tower companies, saying “there are no such issues”.

Rajiv Sharma, research head at SBICap Securities, said the NCD-related payment by VIL to bondholders is significant, “as it was important that the telco did not default on any repayments, else it might have sent a wrong message to the apex court, which is perhaps close to deciding on the repayment schedule for AGR dues”.

Cash strapped VIL is hoping that the Supreme Court allows it to pay up its balance Rs51,000 crore AGR dues over several years, else it was warned it would have to shut shop. It has told the court that it was in no position to offer any bank guarantees as a pre-condition to being allowed to clear its pending AGR dues as it was saddled with heavy losses over several quarters and had no funds to pay. The court will hear the AGR case in the third week of July.

The telco has said its viability also depends on it being able to renegotiate payment terms with its lenders

Analysts also said timely payment by VIL of its NCD dues on maturity was also critical as the cash-strapped telco’s access to banks and capital markets would have sharply deteriorated if it had defaulted. VIL shares closed 4.06% higher at Rs 9.75 on BSE.

Analysts though maintain that cash-strapped VIL needs a hefty rise in tariffs by at least 50% to garner sustainable cashflows that would be enough to service debt, comprising bank loans and deferred spectrum payments, and capital expenditure. In just a year, VIL’s net worth has crashed to a modest Rs 6,000 crore in March 2020 from Rs 60,000 crore in March 2019, and its cash reserves have shrunk to Rs 2,480 crore from Rs 7,550 crore in the same period.

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