One97 Communications Ltd., which is the parent company to the pioneered digital payment application- Paytm just recently announced that it is planning to extend total funds of ₹743 Crore to two other companies that are owned by the Founder and CEO of Paytm- Vijay Shekhar Sharma, after it successfully rolls out its initial public offerings of worth $3 billion, that it planned for the month of November this year.
A notice was issued by One97 to all its shareholders, after the meeting of Paytm’s board of directors was held on May 28. Mentioned in the notice was the pouint that said that just like every other proposal at the company, this too shall be put to vote in the next annual meeting of the company which is to be held on June 30th.
The two companies that will be funded by One97 Communications are VSS Holdings Pvt. Ltd. and VSS Investco Pvt. Ltd. Here, VSS stands for the name of the owner of the company- Vijay Shekhar Sharma.
According to the proposal, Paytm is going to buy off optionally convertible debentures that are worth ₹491.93 Crores. These debentures will be sold by VSS Holdings Pvt. Ltd. The debentures, according to the notes, are said to be matured in next 10 years and will bear an annual interest of 15 per cent. As soon as the debentures get converted into shares, Paytm will then own a total of 96% of the VSS Holdings Pvt. Ltd.
It is unsure as to when this conversion can happen.
The fundings to VSS Holdings will be done in either one or more tranches.
The funds will be utilized for financial intermediation related primary business activities. However, the insurance and pension funding is excluded.
As mentioned above, the second proposal for the fundings that is to be done to VSS Investco Pvt. Ltd., will be put to vote too. The funds required for this are of worth ₹251 Crore. The funds will be made through inter-corporate deposits in one or more tranches.
The notice issues by One97, however mentions that the fundings given to VSS Investco Pvt. Ltd, will however will have to be repaid before the initial public offering of Paytm or by last, within a period of 12 months. Paytm says that Sharma will either have to raise external fundings to repay the loan, or sell his shares in the company to repay this amount of the loan.
Just like VSS Holdings Pvt Ltd, these findings of VSS Investco will also be used for principal business activities of the company.
The other two of the companies by Vijay Shekhar Sharma- VSS Holdco and VSS Investco were launched in the month of January in the year 2020 and both the companies are engaging in similar businesses.