FIPB approves Uninor’s Rs 8,250-cr rights issue

The Foreign Investment Promotion Board has cleared Uninor's proposal to do a rights issue to raise Rs 8,250 crore. Uninor, a joint venture between Norway's Telenor Group (67.25 per cent) and Unitech Group (32.75 per cent), operates in 13 circles. The company had procured pan-India licence in 2008. But the two partners are at loggerheads over the rights issue.

The proposal was earlier challenged by Unitech Ltd in the district court of Gurgaon, which stayed the process. Telenor challenged the stay in the Punjab and Haryana High Court, which also decided to continue with the stay. Telenor then appealed to the Supreme Court which directed Punjab and Haryana High Court to review the case. The Punjab and Haryana Court then lifted the stay, thereby making way for Uninor to proceed with the rights issue.

Responding to the FIPB approval, Telenor's spokesperson, Mr Glenn Mandelid, said, “We had applied to the FIPB for an approval for a rights issue of Rs 8,250 crore to secure Uninor's long term funding through equity in the absence of bank loans. An approval will allow us to bring in more FDI into India as operating capital to support Uninor's continuing development. We are unable to confirm the outcome of the application since we haven't yet received any notification from the authority.”

The Norwegian telecom company had earlier told Business Line that it had kept its option open to find a new Indian partner, if Unitech did not subscribe to the rights issue. But that could take time as the dispute between partners is not just pending in Singapore Arbitration but also pending in Company Law Board.

The Nordic company wants to raise capital for expansion and repaying some of its debts. The company has a debt of around Rs 5,000 crore, a substantial part of which will be repaid through the rights issue. The Norwegian firm is investing Rs 15,500 crore in the Indian venture including the Rs 6,100-crore initial funding and Rs 5,000 crore for current roll-out.

The Unitech spokesperson said, “FIPB today forwarded the proposal to the CCEA with few conditions one of them being that Rights Offer is subject to adjudication of dispute between Unitech Ltd and Telenor ASA. This recommendation of FIPB is in conformity with the Punjab & Haryana High Court, which ruled that Rights Offer shall be subject to the condition that the entire amount collected through the rights issue be treated as advances for Rights Issue to rank Telenor ASA as a creditor of Unitech Wireless (Tamil Nadu) Pvt Ltd, if the award of the arbitral tribunal adjudicates against the rights issue.”

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