Mittals To Pay Rs 20cr To Buy Back 10% Bharti Telecom Stake

The promoters of Bharti Telecom, the Mittals, have agreed to buy back 10 per cent of the companys equity at Rs 120 per share from C Sivasankaran who will receive over Rs 20 crore for selling 16.9 lakh shares in the Bharti group flagship.

The Mittals are expected to sign the deal in a few days with Chennai-based Sterling Horticulture and Resorts Ltd (SHRL), a company promoted by Sivasankaran, which holds the shares. The deal will end more than six months of negotiations.

Bharti sources, however, said that talks had not been concluded. Discussions are on, but we have not heard from their (SHRL) side on the price yet, a company executive said. The Mittals had initially offered Rs 100 a share, but had later veered round to a price of around Rs 110 per scrip.

 

Sivasankaran, who bought the shares at an average price of Rs 95 each about a year ago, is believed to have made a loss of Rs 3 crore in the deal. Sources attributed this to interest costs on the amount paid for the 16.9 lakh shares while acquiring the stake.

The sources expect the deal at the time of signing to be in the range of Rs 41-42 crore because they believe that another 10 per cent of Bharti Telecom has been bought by two other Calcutta-based companies. We are sure that there is at least another 10 per cent that has been acquired by someone which has not come in for a transfer yet, the Bharti executive said.

The takeover threat came out in the open when the Mittals refused to transfer and register 7.5 per cent equity that SHRL had bought from the market. This was after registering 1.5 per cent equity bought by the company earlier.

SHRL later came out with an open offer to the public to buy 25 per cent equity of the company at Rs 95 and sought the Securities and Exchange Board of Indias (Sebi) permission. Bharti, in turn, complained to Sebi and the Company Law Board (CLB) against the acquisition.

To end the stalemate, the Mittals agreed to register the shares bought by SHRL. This was the starting point of a rapprochment, the sources said.

The Mittals, along with their friends and associates, control around 66 per cent of Bharti Telecom, while financial institutions (FIs) and foreign institutional investors (FIIs) hold around 5-6 per cent.

The Mittals control their stake in Bharti Cellular, the Delhi cellular licencee, through Bharti Televentures, a 100 per cent subsidiary of Bharti Telecom. Bharti Televentures in turn holds 51 per cent in Bharti Cellular.

Through Sterling Computers, Sivasankaran won the licence to run cellular services in Delhi and later in Uttar Pradesh (east), Haryana and Rajasthan. However, he sold the computer vendor to the Ruias-promoted Essar group. The Ruias later brought in Swiss Telecom as a foreign partner with 30 per cent stake and are now locked in a battle with the Mittals for a share in the Capitals cellular service business.

SHRL has an equity capital of Rs 50 crore in three businesses, including sale and import of coffee-making machines, horticulture besides investment and finance.