The Hindu Business Line : Telecom panel clears plan to demerge VSNL surplus land

THE Telecom Commission has cleared the proposal to demerge the surplus real estate of 773.13 acres owned by Videsh Sanchar Nigam Ltd. (VSNL) and spin it off into a separate company.

According to official sources, valuers will now be appointed to arrive at a fair value for the surplus land and draft the scheme of the demerger. An application will be made to a court to convene separate meetings of shareholders and creditors of VSNL to consider the scheme of demerger. Another will be filed with the Department of Company Affairs.

To begin with, the resulting company to be formed will have an identical shareholding pattern as that of VSNL as on the date of demerger. However, subsequently, the Tata group, which has strategic management control in VSNL, will transfer all its shares in the resulting new company to the Government.

This is in keeping with the shareholders' agreement signed between both the groups at the time of VSNL's disinvestment. The agreement also mandates that if, for any reason, the company cannot hive off or demerge the land into the resulting company, when the company sells or transfers the land or agrees to sell or transfer or otherwise develop the land, the strategic partner will pay to the Government within seven days an amount equivalent to the percentage of equity holding of the Tata group.

The sources noted that as per the proposal cleared by the commission, the authorised capital of the resulting company, to be registered in Delhi, will depend on the valuers report, but in any case will be not less that Rs 5 lakh.

Further, since VSNL is listed on the Bombay Stock Exchange (BSE) and New York Stock Exchange (NYSE), legal advice is being sought on whether the resultant company also needs to be listed.

VSNL has raised apprehensions that as a result of the demerger, its ADR holders would also have shareholding in the resulting company to the extent as in VSNL. The resulting company will need to issue shares to a depository and ADRs would need to be created to be held by the Bank of New York for the beneficial owners.

In any event, both these exchanges, along with the US Securities Exchange Commission are to be notified shortly, on VSNL's intention to commence action in this regard.

Meanwhile, VSNL has been authorised to draft the memorandum and articles of association of the resulting company and get it approved by the Government and board of directors, the sources said.

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