2009 NDTV Loan Deal: Lender, borrower seeking ‘stable and reliable’ buyer for holding company
Vishvapradhan Commercial Private Ltd, a little-known entity through which Adani Group launched a hostile bid for NDTV Ltd, had an annual turnover of just Rs 60,000 a few years ago, but it granted Rs 400 crore in loans interest-free to the broadcaster in 2009, according to Sebi orders.
In addition, the “loan agreement” signed at the time with the promoters of NDTV included a unique provision that “over the next 3-5 years, the borrower and the lender will seek a ‘stable’ and ‘reliable’ buyer “of RRPR, which will maintain the brand and credibility of NDTV”.
RRPR Holding Pvt Ltd was set up by Radhika Roy and Prannoy Roy as a limited liability company, whose 29.18% stake in NDTV had apparently been transferred to VCPL, which has now been sold to Adani Enterprises Limited and AMG Media Networks Limited.
On Tuesday, VCPL exercised the right to acquire 99.5% of the shares of RRPR, which triggered an open offer to acquire up to 26% of the capital of NDTV.
Subsequently, VCPL along with Adani Media Networks Ltd and Adani Enterprises Ltd made the open offer at a price of Rs 294 each for the acquisition of up to 1.67 crore fully paid shares of NDTV, raising the size at Rs 493 crore.
However, NDTV said the debt was converted to equity without any contributions from the founders or the company.
The rights exercised were part of the loan agreements signed by VCPL with the promoters of NDTV.
NDTV took out a loan of Rs 350 crore from VCPL in 2009 to repay the loan previously given by an ICICI Bank news channel and a year later the broadcaster was granted a loan of Rs 53.85 crore from VCPL. The loan from ICICI Bank was taken out to repay an earlier loan from Indiabulls.
Interestingly, VCPL bore no interest rate while the loan from ICICI bore an interest rate of 19% per annum.
The loan agreement provided for RRPR to issue a warrant to VCPL, convertible into shares amounting to 99.99% of the RRPR upon conversion at any time during the term of the loan or thereafter.
In addition, it gave VCPL the right to purchase from the promoters all of the shares of RRPR at par. In addition, two call option agreements have been entered into between Subhgami Trading Private Limited and RRPR, and Shyam Equities Private Limited and RRPR, respectively.
The call option gave the two entities – Subhgami Trading and Shyam Equities – the right to buy up to 26% of NDTV’s capital from RRPR. These entities were associated with the shareholders of VCPL at the material time.
The purchase option agreement also contained a “right of first refusal”, which bound both the borrower and the lender and prevented them from selling or transferring the equity securities of NDTV to a third party before the expiry of a period of five years from the date of the purchase option agreement.
According to Sebi Orders, the main focus of VCPL was wholesale and related business activities and the company had a turnover of only Rs 60,000 in the financial year 2017 and more than Rs 400 crore of rupees in long-term loans and advances.
The regulator observed that VCPL and its associated companies were not used to making such loans and did not appear to have the financial means to make loans on such concessional terms.
VCPL was initially linked to Ambani’s group, but its ownership was transferred to a company run by a associate linked to Delhi-based Nahata group in 2012. Jio d’Ambani had bought Infotel Broadband from Nahata group in 2010 to re-enter the sector telecommunications.