Vodafone Idea will free up money to pay outstanding conversion lenders
– World Affairs SRS
Vodafone Idea’s (VI) decision to convert the amount due to the government into equity is beneficial to the lenders as its liabilities will be reduced and more funds will be available to service the huge debt pile. However, senior bank officials said clarity on the road map for the transformation is essential.
According to an investor presentation, its gross debt stood at Rs 1.93 trillion as of September, of which deferred spectrum payment obligation was Rs 1.08 trillion and debt from banks and financial institutions stood at Rs 22,700 crore.
A top official of a private bank said the money which was going to pay government dues, would remain in the books and should be used for loan payments.
With regard to granting of additional funds, bankers said that some bank guarantees would be returned, releasing the space for additional risk. Conversion of outstanding amount into equity is only one element and banks will have to assess the schemes. Vi raised about Rs 5,000 crore through short-term loans from lenders including State Bank of India and Union Bank of India.
A senior public sector bank official said this is essentially bridge funding to meet immediate liabilities.
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