|
 Videsh Sanchar Nigam
Limited (VSNL)
|
|
|
|
DISINVESTMENT IN VIDESH SANCHAR
NIGAM LIMITED
1. Government has approved sale
of 25% equity share holding out of a total government share holding
of 52.97% in Videsh Sanchar Nigam Limited (VSNL) on
5.02.2002 . The total paid-up
capital of VSNL is Rs.285 crore, the Govt. holding being Rs.151crore.
Rs.71.25crore of this equity is being sold to M/s Panatone (Tata
Group) at a price of Rs. 1439 crore..
|
| 2. Government had decided
to disinvest in VSNL in January 2001 and the advertisement for inviting
Expression of Interest was issued in February 2001. Several interested
parties had submitted their Expression of Interest. After the process
of due diligence was completed and the transaction documents frozen,
financial bids were invited from the bidders on 1.2.2002. Two bids
were received. |
| 3. SBI Capital Markets
Ltd. and CSFB were appointed as the advisors at a fee of 0.19% of
the transaction value. M/s Crawford Bayley & Co. is the legal advisor
and the asset valuer is Pricewaterhouse Coopers Ltd. After considering
the Advisor's report, the Evaluation Committee/IMG/CGD submitted
their recommendations regarding acceptance of the higher bid to
the CCD. |
| 4. The Government has
in the process of disinvestment in VSNL received approximately Rs.
3689 crores, Rs. 1439 crores as the bid price, Rs. 1887 crore as
dividend and Rs. 363 crore as dividend tax (table attached). Thus,
the Government has sold its shares at a price of Rs. 202 per share,
taken additional amount as dividend, special dividend and dividend
tax. Besides the Government has also taken measures to take out
surplus, yet very valuable land (value Rs. 778 crore) from VSNL,
and also restrict use/sale of land through provisions in transaction
documents. |
| 5. The market price
of VSNL shares as on 1.2.2002 was Rs.158/-. The Government had earned
Rs.10.4 cr per year on 25% of its equity in the last eight years.
This year the Government has earned Rs. 3689 crore from sale of
VSNL and if this money is kept in the bank it would earn an interest
of 368.9 crore, i.e. the Government would gain more than Rs. 350
crore every year. |
|
6. The strategic partner has been
provided a call option for the 5th year subject to the condition
that the Government would be retaining at least one share and
hence one vote position to enforce its affirmative vote on assets.
In addition, 1.97% share were given to employees, at concessional
rates.
top
|
