Need I-T nod for transfer of shares, says NDTV, Adani says it's misconceived

NDTV promoter group firm RRPR Holding has told VCPL, which along with two other Adani group firms has launched a hostile takeover bid for the media firm, that its stakeholding in NDTV has been provisionally attached by the I-T authorities and require their approval for the transfer.

The contention has been rejected by the Adani group, which termed it as "misconceived and misleading" statements while asking RRPR Holding to convert the warrants into equity shares.

In a regulatory filing, NDTV said that its founders Radhika and Prannoy Roy have informed that RRPR Holding has intimated Adani group firm Vishvapradhan Commercial Pvt Ltd (VCPL) that the attachment of the shareholding, notified in 2018, shall remain in place until the completion of reassessment proceedings.

The group has asked RRPR Holding (RRPRH) to withdraw the letter and alleged it was written with the intent to further inordinately delay the warrant conversion and to perform its obligations without any further delay.

RRPRH has communicated to VCPL that due to attachment, it will require approvals from the IT Authorities and "invited VCPL to join its application to the Income Tax Authorities", the filing stated.

"The IT Department attachment order of 2017 pertains to the loan agreement with VCPL in 2009, and is premised on RRPRH (allegedly) transferring its controlling interest in NDTV to VCPL for Rs.403.85 crore, culminating in an estimate of Rs175 crore “tax on capital gains arising on sale of controlling interest in NDTV to VCPL” on RRPRH," said NDTV.

RRPRH also said the NDTV founders Radhika and Prannoy Roy may individually require independent approval from IT authorities "to deal with any assets, including indirect shareholding in NDTV, arising from sub judice order."

However, the Adani group said RRPR Holding's letter lacks bona fides and has "no merit or basis either in law or in fact and is misconceived".

"The IT Orders only apply to the shares of NDTV held by RRPR and in no manner restrict RRPR from completing the formalities in relation to allotment of equity shares to VCPL on the exercise of the warrants," said a regulatory filing from Adani Enterprises Ltd.

On August 23, Adani group announced the acquisition of a 29.18 per cent stake indirectly in NDTV through the acquisition of VCPL, which holds a 99.99 per cent stake in RRPR Holding.

Following this, Adani group firms, Vishvapradhan Commercial Private Limited (VCPL) along with AMG Media Networks and Adani Enterprises Ltd, proposed to acquire an additional 26 per cent or 1.67 crore equity shares through an open offer.

VCPL also denied that the steps required to be taken by RRPR in terms of the warrant conversion notice dated August 23, 2022 "requires any prior approval from the Assessing Officer", as alleged, said Adani group.

"It is evident that the RRPR Letter has been issued with the intent to further inordinately delay and seek to justify RRPR's default in compliance with its obligation as set out in the Notice and completing the formal steps of allotment of equity shares of RRPR to VCPL," said Adani group.

Adani group had already announced to launch its open offer on October 17 for acquiring an additional 26 per cent stake in media firm NDTV.

The open offer for acquiring 1.67 crore equity shares, for which a price of Rs 294 per share has been fixed, will tentatively close on November 1.

If fully subscribed at a price of Rs 294 per share, the open offer will amount to Rs 492.81 crore.

NDTV founder promoters have asserted that the deal cannot go ahead without Sebi's nod.

In an order passed on November 27, 2020, the Securities and Exchange Board of India (Sebi) restrained NDTV founders -- Radhika Roy and Prannoy Roy -- from the securities market for two years and that period ends on November 26.

As restrictions are still in force, prior written approval from Sebi was required for Vishvapradhan Commercial Private Limited (VCPL) for the exercise of the conversion option on the warrants, NDTV founders said.

RRPR Holding Ltd and Adani group have approached Sebi, seeking clarity on the applicability of the regulator's earlier order regarding the conversion of warrants into shares, which has become a decisive factor in the hostile takeover battle for the media group.

Though Adani group has already rejected NDTV's assertion saying that promoter entity RRPR Holding is not a part of the regulator's order that restrained Prannoy and Radhika Roy from accessing the securities market.

On August 23, the Adani group announced to launch an open offer to buy an additional 26 per cent stake in the company, which operates three national news channels - English news channel NDTV 24x7, Hindi news channel NDTV India and business news channel NDTV Profit.

NDTV had taken a loan of Rs 403.85 crore in 2009-10 and against this amount, warrants were issued by RRPR.

With the warrants, VCPL had the right to convert them into a 99.9 per cent stake in RRPR in case the loan was not repaid.

Adani group first acquired VCPL and exercised the option to convert unpaid debt into a 29.18 per cent stake in the news channel company.