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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (9670)	11/19/1999 10:39:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

VSNL to convert GDRs into ADRs, hive off Internet unit New Delhi, November 19 (Arun Kumar-Hindustan Times) Videsh Sanchar Nigam Ltd (VSNL) has embarked upon a major restructuring exercise. vsnl.net.in This includes listing of its existing GDRs on the ADRs market and hiving off its Internet related services into a separate company - India Seamless Services Ltd (ISSL). The proposal to have ISSL listed on the exchanges by making a fresh offer in the United States market also being considered. Once this restructuring will be completed, VSNL will raise funds by making an offer of sale of its holding in ISSL to meet its own capital expenditure requirement. "The discussions are at an initial stage, but this is one modality which will help in raising capital by VSNL as well evaluating its investment in ISSL", a senior official stated. According to a senior VSNL official, the company is looking for listing on the New York Stock Exchange (NYSE) in the first quarter of 2000. However, for listing on the NYSE the company would not make any fresh offer of shares but convert its existing GDRs, which are currently listed on the London Stock Exchange (LSE), to ADRs. The existing GDR holders will be given an opportunity to convert their GDRs into ADRs and trade on the NYSE. Since liquidity in the American market is much more than in any other, it will help the company in assessing the intrinsic value of its shares, the official observed. At the same time, the company is also working on hiving off its Internet related business into a separate wholly owned subsidiary. The company has already held a series of meetings with its investment bankers and legal experts to decide the modality of transfer of assets. It is understood that VSNL will transfer all the assets engaged in the business of Internet related business at book value. At the present levels, the asset transfer will be valued at around Rs 100 crore. Incidentally, this will be the paidup capital of the company. Currently VSNL's value added business which includes Internet and frame relay service among others account for Rs 175 crore out of the company's total turnover of Rs 7,175 crore. However, this figure does not include any tangible asset. Following the grand success of Satyam Infoway, which is relatively a much smaller company than VSNL's Internet unit, on Nasdaq has given us an opportunity", the VSNL official said. Currently, Satyam Infoway has a market capitalization of around US $1.2 billion. If one considers this as the benchmark, then VSNL can meet its capital requirements of the next couple of years by divesting a minor stake in ISSL, a source said. In the case of VSNL, the government's holding has already come down to 53%. As a result, there is not much scope for raising fresh funds as it will dilute the government's holding to below 51%.