Television Eighteen India Ltd on Thursday announced the creation of a new company, Network 18, as well as splitting its stocks in the ratio of 1:2. The new entity will include the newly launched English news channel ‘CNN IBN’, which will soon approach the capital market for a public issue.
The new scheme creates a Group structure of two companies – TV 18 and Network 18 – which, the company said in a statement, would unlock significant shareholder value. Hitherto, the Hindi consumer channel of the Group, CNBC Awaaz, and the new general English news channel, CNN IBN, were held in promoter entities and were legally not part of the listed company due to government restrictions.
Under the new arrangement, the operations of both the business news channels, CNBC-TV18 and Awaaz, have been consolidated in the company TV18, whereas Network 18 India Holdings Ltd would hold majority stakes in TV18 and CNN-IBN.
TV18 would also hold a portfolio investment stake in CNN-IBN, whose value could be realised at an opportune time. The restructuring would enable the Group to comply with the uplinking guidelines of the government, the company said in a statement.
The restructuring will be achieved through a High Court process, whereby TV18 shareholders will automatically be allotted shares proportionately in the two entities and will now have a legal holding in both the companies.
Post-sanction of the High Court, the revised structure would leave TV18 with a share capital of 52.41 million shares having a face value of Rs 5 each, while Network 18 would have a share capital of 50 million shares having a face value of Rs 5 each.
Post implementation of the restructuring, Network 18 will approach the markets with a public offering to raise money for further growth as well as facilitate efficient price discovery. Speaking to exchange4media, Haresh Chawla, CEO, TV 18, said, “The new public issue may take 10-12 weeks.”
KPMG India Pvt Ltd had provided valuation guidance for the restructuring scheme, while BMR & Associates acted as transaction and financial advisors.
Based on the share swaps recommended by the experts, an existing shareholder of TV18 holding 10 shares of face value Rs 10 each would end up with 12 shares of face value Rs 5 each in Network 18 Ltd and 14 shares of face value Rs 5 each in TV18.
The Group will now approach the stock exchanges for mandatory clearances, and then apply to the Delhi High Court for sanction of the scheme.