Social media platforms in India have been abuzz for the last few days on how Adani Group, owned by the richest man in India, Gautam Adani, is trying to purchase a majority stake in one of the oldest private news channels in the country, NDTV.
A few days ago on August 23rd, AMG Media Network Limited (a subsidiary of Adani Enterprises Limited) announced that the company would acquire a 29.18 % stake in NDTV. The acquisition was executed through the purchase of a company named Vishvapradhan Commercial Private Limited, which had warrants against a loan on RRPR Holdings, a shareholder of NDTV.
Even though the latest string of events can be termed as typical corporate takeover activity, the seeds of this takeover were sown almost a decade ago through a loan.
NDTV loan from VCPL in 2009-10
NDTV (New Delhi Television Limited), which was founded by Prannoy Roy and Radhika Roy, 28 years ago, took a loan of 403 crore rupees during the financial year 2009-10 from a company named Vishvapradhan Commercial Private Limited (VCPL). It was RRPR Limited who took the loan from VCPL on behalf of NDTV.
According to the loan agreements, RRPR should issue warrants to VCPL. These warrants were designed in such a way that they can be converted into equity shares at any point in time, and such equity shares would represent 99.99% of the share capital of RRPR.
The loan agreement also made it mandatory for promoters of NDTV, Radhika Roy and Prannoy Roy, to shell out some of their shareholdings in NDTV to RRPR Holdings.
RRPR Holdings, which only had a 7.56% stake in the media company, saw a huge increase in its shareholding during that period. By the end of January 2010, the shareholding of RRPR Holdings in NDTV increases to 29.18%.
Even though there was an investigation by the Securities Exchange Board of India into the loan and non-disclosure of the loan agreement, many people forgot the significance of the warrants issued against the loan.
How VCPL was acquired by Adani Group
VCPL, which is allegedly a shell company owned by Reliance Industries of Mukesh Ambani, was silently acquired by Adani from Nextwave Televentures and Eminent Networks.
It is important to note that in the last two financial years VCPL only had a turnover of just 1 lakh rupees. This denotes that the company doesn’t have much business activity.
Soon after the acquisition of VCPL by AMG Media Network Limited, the company decided to execute the warrants against the old loan. By exercising the warrants Adani acquired a 99.95% stake in RRPR Holdings which has a 29.18% stake in NDTV.
Indirectly, through acquisitions and exercising warrant, Adani Group now owns a 29.18% stake in NDTV.
Soon after the announcement, AMG Media Network Limited and Adani Enterprises Limited announced that it was making an open offer of 493 crore rupees for a 26% stake in NDTV. In the open offer, companies owned by Adani are offering 294 rupees for each share of NDTV.
As the announcement of the indirect acquisition and open offer rocked social media with various questions and concerns regarding freedom of media from corporates, NDTV released a statement saying that the promoter group of NDTV did not know about the acquisition activity.
NDTV on Thursday said that Adani Group will need to get a nod from the Securities and Exchange Board of India to acquire majority stakes in the promoter group of the media company, as Radhika Roy and Prannoy Roy who own NDTV are barred from accessing Capital markets in the country till November 26th 2022.