The Board of Directors of New Delhi Television Ltd has approved the draft scheme of the demerger of the news businesses of NDTV Ltd into a new company. The appointed date for the scheme would be April 1, 2009. The decision was taken at a meeting of the NDTV Board held on October 1.
The NDTV Group will thereby be split into two groups of companies – one group of companies will carry out ‘news and other businesses’, while the other group of companies will carry out ‘entertainment and specified allied businesses’.
The aim of the demerger is to unlock shareholder value as well as provide increased choice and flexibility to shareholders. Moreover, the news business and the entertainment business operate under very different regulatory environments.
Following the demerger, NDTV Ltd will continue to remain listed on the Bombay Stock Exchange and the National Stock Exchange and will engage in non-news businesses. Subject to necessary approvals, the new company would also get listed under Clause 18.104.22.168 of the SEBI (Disclosure & Investor Protection) Guidelines, 2000. This new company would engage in news and allied businesses.
After the demerger, for every one share currently held in NDTV Ltd, a shareholder will receive one share in the new company – for every share of face value of Rs 4 currently held in NDTV Ltd, a shareholder will receive a share of face value Rs 4 in the company that will acquire the news businesses of NDTV Ltd as part of the demerger. At the same time, the shareholder will continue to hold his current Rs 4 share in NDTV Ltd.
Suitable arrangements will be put into the terms of the scheme for the ownership and use of the NDTV brand. Arrangements for the ownership and use of common assets will also form part of the Scheme.
As part of the Scheme, certain undertakings and guarantees provided by NDTV Ltd will be undertaken by both the companies after the de-merger. The Scheme shall be subject to the approval of the Delhi High Court and subject to all other requisite approvals.