The Hindu Business Line : Tata Tele Maharashtra plans Rs 325-crore rights issue — 2 shares for every 25 held at a premium of Rs 15-17

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Tata Tele Maharashtra plans Rs 325-crore rights issue — 2 shares for every 25 held at a premium of Rs 15-17

Our Bureau

Mumbai , Jan. 24

TATA Teleservices (Maharashtra) Ltd (TTML) on Tuesday filed a letter of offer for a rights issue with SEBI to mobilise Rs 300-325 crore to meet its ongoing funding requirements.

The rights issue is in the ratio of two shares for every 25 shares held and is priced at a premium of Rs 15-17 on a face value of Rs 10 each. When contacted, a senior company official said it was difficult to know the exact amount of divestment of shares. "The reason why we cannot say exactly what divestment it will lead to is because there are some outstanding convertibles, which may be converted before the record date. However, since our existing share capital is Rs 1,500 crore, less than 10 per cent stake will be divested even at a price of Rs 25 a share," he said.

The Tata Group companies collectively own 65.53 per cent of the issued and paid-up equity capital of the company, including Tata Teleservices Ltd (TTSL), which owns 47 per cent of the issued and paid-up equity capital of TTML.

"Under the terms of the loans availed of by the company, TTSL has pledged its shareholding in favour of the lenders and has also undertaken that the percentage of shares pledged by it would not be less than 50.83 per cent of our total subscribed equity shares (subject to any dilution as a result of exercise of employee stock options)," said the draft offer letter. The Tata Group owns almost the entire equity interest in TTSL and approximately 46.5 per cent of the equity interest in VSNL. For the fiscal ended March 31, 2005, the company has incurred a net loss of Rs 527.86 crore. "We have incurred net losses since incorporation and expect to continue to incur losses for the foreseeable future due to the nature of the business, which involves capital and operational expenditure for the development and expansion of our network," the offer document said.

TTML operates in two telecom circles — Mumbai and Maharashtra (including Goa). The company offers CDMA wireless services (comprising CDMA mobile and CDMA fixed wireless services) and wire-line services in these circles.

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