Financial Daily from THE HINDU group of publications
Wednesday, Oct 19, 2005
Financial Daily from THE HINDU group of publications Wednesday, Oct 19, 2005 |
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Mergers & Acquisitions Info-Tech - Telecommunications BK Modi group co buys out Distacom stake in Spice Tele Our Bureau
The Chairman of Mcorp Global, Dr B.K. Modi (left), and Mr Navin Kaur, Chief Operating Officer, Karnataka Spice Telecom, at a press conference in Bangalore on Tuesday. - - Sampath Kumar
Bangalore , Oct 18 THE B.K. Modi-controlled McorpGlobal has bought out the stake of Hong Kong-based Distacom and AIG's Emerging Market Fund in Spice Telecom's Karnataka circle. The buyout ends months of intense speculation that Spice Telecom was on the lookout for suitors. Speaking to newspersons today, Dr B.K. Modi said that the group's stake in Spice Telecom will now rise to 36 per cent from 22 per cent. "Distacom is no longer a shareholder. They are out of this venture." Only Franklin Templeton-owned Darby remains a stakeholder with 15 per cent in the venture. The investment banking arm of Deutschebank and Ashmore Fund would be holding 49 per cent of the stake. "This is essentially a banking arrangement," said Dr Modi. This implies that the investment banks were warehousing the deal on behalf of the group. The buyout involves settling of outstanding vendor credits to Motorola and Siemens for past purchases of telecom equipment. These two vendors were paid $13 million. Another $120 million of loans have been rescheduled by another five years as part of the financial restructuring. Dr Modi refused to reveal the value of the stake buyout. However, going by past buyouts, as in the case of the BPL-Hutch deal, the figure could be around $400 per subscriber. Dr Modi said that strategic investors would come into the venture over the next six months. One of them is believed to be Europe's largest mobile service provider, Vodafone. "We are open to them," he said. However, he also stressed that he held the ace. "Any new player would have to start from scratch or alternatively talk to the regional players. Us."
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