Vodafone-Hutch deal:Almost Cleared !
April 27th 2007 03:25
British premier Tony Blair,in a letter to prime minister Manmohan Singh has sought clearance of the Vodafone-Hutch deal,which have been embroiled in a controversy over violation of FDI norms.There are all indication that the deal would be cleared but Vodafone can not exercise an option over a 12.26 percent stake in Hutchison Essar ,at the pre determined price.Vodafone had agreed to pay $11.1 billion for 52 % stake in HEL.Going by this valuation,the 12.26% held by the minority shareholders should be valued $2.7 billion.But,the stake held by Asim Ghosh was valued worth $164 million,while Analjit Singh's stake was valued at $266 million,putting a total of $430 million and freezing the valuation up to $25 billion for HEL.The difference in valuation and "pre-determined"pricing were questioned by CPI MP Ajay Chakraborty.According to him the holding of Mr.Ghosh and Mr. Singh should be valued over $3 billion,when the valuation of HEL touches$25 billion.
As per a report published in the Financial times,Vodafone will not be allowed to fix the price and can not buy 12.66% stake for as little as $430 million.
As per Foreign Exchange Management Law,Overseas Companies can not resort to pre-determined pricing formulae on which they buy out when
the current ceilings are removed.Moreover, shares in an unlisted Indian company may not be bought by a non-resident at “less than a fair valuation”. This has to be as per guidelines set by the Reserve Bank of India.
HTIL, explained the FIPB that the valuation of $430 million for the 12.26 stake was done by Goldman Sachs,taking into account the debt facilities provided to the two shareholders.The subscription option was only a measure of extra caution and it did not affect the fair value of the stake.So,the pacts do not prevent them from benefiting out of capital appreciation.
As per a report published in the Financial times,Vodafone will not be allowed to fix the price and can not buy 12.66% stake for as little as $430 million.
As per Foreign Exchange Management Law,Overseas Companies can not resort to pre-determined pricing formulae on which they buy out when
the current ceilings are removed.Moreover, shares in an unlisted Indian company may not be bought by a non-resident at “less than a fair valuation”. This has to be as per guidelines set by the Reserve Bank of India.
HTIL, explained the FIPB that the valuation of $430 million for the 12.26 stake was done by Goldman Sachs,taking into account the debt facilities provided to the two shareholders.The subscription option was only a measure of extra caution and it did not affect the fair value of the stake.So,the pacts do not prevent them from benefiting out of capital appreciation.
| 16 |
| Vote |
Subscribe to this blog
