Raghav Bahl firm to handle Reliance trust

Latter to hold significant interest in Network18 Group, as disclosure statements reveal complex web between the groups

Independent Media Trust (IMT), created by Reliance Industries (RIL) to hold its interests in the Network18 Group, will be managed by an entity owned by Raghav Bahl, the latter’s promoter.

Nilrab Media Pvt Ltd, the trustee, is owned jointly by Bahl and his wife, Ritu Kapur. IMT will hold considerable economic interest in the Network18 Group after the acquisition of Eenadu, according to regulatory filings by Network18 Media and TV18 today. The two companies filed offer documents with the market regulator to raise Rs 2,700 crore each through rights issues.

SNAPSHOT

* Network18 raised Rs 2,700 crore through rights issue

* It will use Rs 1,384 crore to subscribe to the rights issue of TV18 Broadcast

* To keep its stake above 50% in TV18 Broadcast

* It will use Rs 1,182 crore to repay loans

* TV18 will use Rs 1,925 crore to complete the ETV acquisition

* It will use Rs 421 crore to repay loans in its books

The move to appoint a private company as the trustee of IMT is slightly different from what had been announced earlier. In January, RIL had said the “independent trust will have eminent individuals as Trustees, thus preserving the management, operational and editorial independence of these media companies”.

In a three-way deal, IMT will fund the promoters of Network18 and TV18 to subscribe to rights issues. The companies will, in turn, use these proceeds to complete the ETV acquisition.

Of the Rs 2,700 crore raised through the rights issue, Network18 will use Rs 1,384 crore to subscribe to the rights issue of TV18 Broadcast, so as to keep its stake above 50 per cent. Of the rest, it will use Rs 1,182 crore to repay loans. TV18 will use Rs 1,925 crore to complete the ETV acquisition. It will use Rs 421 crore to repay loans in its books, the companies said in their offer documents.

TV18 will buy out a firm called Equator, which in turn owns a firm called Panorama, which controls ETV’s news channels business. Equator also has 50 per cent in Prism, the company that owns ETV’s entertainment channels and 24.5 per cent in the third entity, Eenadu, which owns the Telugu news channels.

“TV18 proposes to undertake the ETV Acquisition which will be entirely funded from the proceeds of the rights issue of TV18. In connection with ETV Acquisition, we (Network 18) and TV18 have entered into a share purchase agreement with Equator, Altitude and Kavindra,” Network18 said in its offer document.

Altitude and Kavindra, which together own Equator, are to sell their holdings to TV18, for an aggregate consideration of Rs 1,925 crore, the document said.

Explaining the structure of the three way deal, the offer document said IMT would subscribe to zero coupon optionally convertible debentures (ZOCDs) issued by the promoter entities. The money raised is to be used to subscribe to the respective entitlements in the rights issues and any shortfall thereof. The investment agreements for issue of these bonds were signed on February 27.

“In terms of the ZOCD Investment Agreement, IMT shall subscribe to such number of ZOCDs of face value Rs 100 each,” went the offer document. The ZOCDs will have a tenure of 10 years.

The offer document also hinted that the Network18 group may not continue using the trademark of ETV. “We may not be able to continue to use the ETV trademark and ETV brand names. Pursuant to the trademark licence agreement, Eenadu has granted an irrevocable, exclusive and royalty-free licence on a worldwide basis to use the ETV trademarks and ETV brand names in relation to the ETV news channels and ETV non-Telugu channels, respectively, up to February 28, 2015,” it said.