The Hindu Business Line : Anil Ambani recasts telecom

The recast
Reorganisation to be achieved through a share swap, with no cash outgo and will come into effect from April 1.
Subject to shareholders' and regulatory approvals, including sanction of the High Courts.
Restructuring based on independent valuations provided by KPMG and JM Morgan Stanley.

Mumbai , March 12

Just days after listing Reliance Communciations Ventures Ltd (RCoVL), the company's board has approved the reorganisation of the ownership structure of its major operating companies.

Post-reorganisation, the promoter Reliance Anil Dhirubai Ambani Group's (ADAG) stake in RCoVL will increase to 63 per cent, from about 40 per cent earlier. It will also change RCoVL's profile from a holding arm to an operating company.

The proposed restructuring of RCoVL, announced after the company's board met here on Sunday, includes the merger of Reliance Infocomm Ltd (RIC) with itself.

RCoVL will also have 100 per cent ownership in the two operating companies Reliance Telecom Ltd (RTL) and Reliance Communications Infrastructure Ltd (RCIL), a RCoVL release said.

Prior to the reorganisation RCoVL held 45.3 per cent in RIC, 45 per cent in RCIL and 35.6 per cent in RTL.

RCoVL, which was listed on March 6, 2006, is one of the four de-merged companies, following the settlement of the ownership issues between the Ambani brothers.

EFFECTIVE FROM APRIL 1

The reorganisation will be achieved through a share swap, with no cash outgo and will come into effect from April 1, 2006. After the restructuring, RCoVL's paid-up equity share capital will increase to an estimated Rs 1,022 crore, from the Rs 610 crore earlier.

Besides aligning the interests of over two million shareholders (touted to be the largest shareholder base in the country, in a single listed entity), the reorganisation brings in a transparent ownership structure, the note said. It also eliminates areas of potential conflict of interest and puts to rest concerns of possible multiple listings of group companies, the note added.

RCoVL will also own the 134-acre Dhirubhai Ambani Knowledge Centre complex and several other valuable properties, at which its national headquarters and major business facilities are located, and which are currently owned privately, the note said.

SHAREHOLDER APPROVAL

The reorganisation will be subject to shareholders' and regulatory approvals, including sanction of the High Courts. RCoVL's existing equity shares will continue to trade normally on the stock exchanges with no impact on liquidity during the proposed reorganisation, the company said.

RCoVL's post-reorganisation market capitalisation would be about Rs 61,000 crore, based on the closing stock price of Rs 301 as on March 10, 2006, the note said.

"The proposed reorganisation upholds the highest principles of transparency, fairness and corporate governance, and is a historic milestone in our endeavour to create the most valuable India-based global communications services company," said the Chairman of RCoVL, Mr Anil D. Ambani, in a statement.

Being an "interested director", Mr Anil Ambani did not participate in the board's proceedings.

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