Others

Clarification

| Updated on January 19, 2011 Published on January 19, 2011

With reference to news item appearing in leading financial daily titled "Vodafone objects to Essar Groups reverse listing of holding company, India Securities Ltd (ISL) has submitted to BSE the Companys response to the objections raised by Vodafone. The Company has further informed that Vodafone has no locus standi to raise such objections to the merger since it is neither a shareholder nor a creditor of both Essar Telecommunications Holdings Private Limited (ETHPL) and ISL.

"Information to the Shareholders of ISL about the proposed merger scheme :

The shareholders have been well informed about the merger scheme with all details being adequately disclosed vide the Explanatory Statement annexed to the notice convening the meeting of the equity shareholders.

Further, the fact that Essar Groups 10.97 % stake in Vodafone Essar Limited (VEL) would become a part of ISL, post merger, has been known to the shareholders of ISL since the same has been appearing in the annual report of ETHPL, valuation reports for calcu1ating share swap ratio etc. which were available for public inspection for nearly one month. Also, the scheme clearly mentions the fact that the merger would result in the transferee company (i.e. ISL) becoming a stakeholder in a leading telecom company in India in which Essar Group holds stake.

Investments contrary to ISLs stated investment intention

It must be noted that post merger ISL would have the right to decide whether it intends to carry on the business proposed to be carded out by its wholly owned subsidiary.

Valuation for conversion ratio based on underwritten put option

Essar has two put option viz. underwritten put option and fair market value put option, for divesting its stake in VEL to Vodafone. On exercise of underwritten put option, Essar can sell stake its stake to Vodafone for an agreed value whereas on exercise of fair market value put option the stake sale will happen at the fair value. Thus, the underwritten put value is the minimum assured value that Essar will receive on sale of Vodafone stake.

Liquidity in ISL

As per the provisions and calculation mechanism laid down under Explanation 1 to Regulation 20(5) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997, ISL can not be regarded as an infrequently traded Company. Accordingly. the contention of Vodafone that ISL is factually incorrect."

Source : BSE - >www.bseindia.com

Published on January 19, 2011
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