The shareholders of Vodafone Idea (VIL) have approved a proposal of the management to raise Rs 14,500 crore at an extra-ordinary general meeting (EGM) of the company on Saturday.

The telecom player will make a preferential allotment of Rs 4,500 crore to promoters Vodafone group plc and the Aditya Birla group.

It also sought shareholders’ approval to mobilise Rs 10,000 crore through equity or instruments such as ADR, GDR, foreign currency convertible bonds, warrants and qualified institutions placement (QIP). The board had approved the funding plan on March 3.

In its notice sent to the shareholders, the telco had said that it required additional funding for servicing or repayment of existing debts, capital expenditure, working capital requirements apart from general corporate purposes.

The company said it wanted to take the approvals from the shareholders in advance.

Vodafone group firms Euro Pacific Securities and Prime Metals will subscribe to 253.75 crore shares at the price of Rs 13 per share, aggregating Rs 3,375 crore. Aditya Birla group arm Oriana Investments Pte will be allotted 84.58 crore shares for Rs 1,125 crore.

The resolution on the issue of preferential shares got the approval of 99.92 per cent of the shareholders present. The proposed Rs 10,000 crore mobilisation received the approval of 99.68 per cent of the shareholders.

At the EGM, VIL moved a resolution for the amendment of its articles of association, supported by 99.87 per cent of its shareholders.

Another resolution to raise its authorised share capital was supported by 99.98 per cent of the shareholders.

Ahead of the EGM, proxy advisory firm IiAS recommended that shareholders vote in favour of all the resolutions.

VIL had posted a consolidated loss of Rs 7,231 crore for the third quarter ended December 31, 2021 on revenues of Rs 9,715 crore.

Its total gross debt as of December 31, 2021 stood at Rs 1.98 lakh crore that included deferred spectrum payment obligations and adjusted gross revenues (AGR) liability to the government.

It also comprised debt from banks and financial institutions of Rs 23,060 crore.

Cash and cash equivalents stood at Rs 1,500 crore, leading to a net debt of Rs 1.97 lakh crore.

In January, the telco had decided to exercise the option of converting the interest on spectrum installments and AGR dues into equity following which the Centre will hold around 35.8 per cent.

Analysts said the Rs 14,500 crore funding will not be enough for the company. “The announced fund raise still remains miniscule in comparison to VIL’s debt. VIL still needs to continue to raise significant capital to repay existing dues,” analysts at Kotak Securities had said in a note.

“It is yet to be seen if any external strategic investors decide to participate in VIL’s upcoming Rs 10,000 crore capital raise given the underlying challenges that the company faces,’’ the analysts said.

EGM okay

⚫ Shareholders approve proposal to raise Rs 14,000cr

⚫ Preferential allotment of Rs 4,500cr to Vodafone plc and Aditya Birla group

⚫ Telco to raise another Rs 10,000cr through a mix of instruments such as ADR, GDR