Tata Power Co. Ltd is set to acquire 118.2 million shares of Tata Teleservices Ltd, the company said in a filing to the stock exchanges on Tuesday.
Tata Power’s move follows the 28 April order of the Delhi high court in which it approved the consent terms between Tata Sons Ltd and NTT DoCoMo Inc. for resolution of the differences between them with respect to the London Court of International Arbitration Award dated 22 June 2016.
Tata Power’s share purchase follows an inter se agreement between Tata Teleservices and Tata Power on 25 March 2009.
As on the date of the Arbitration Award, Tata Power was to pay $1.17 billion for the same. The final amount payable would be determined on the date of the payment to DoCoMo and would, therefore, vary over the amount indicated above, it said.
Tata Power remitted Rs790 crore to Tata Sons on 9 August 2016 and this will be appropriately adjusted against the amount that will be governed by the terms and conditions similar to those stipulated by the Delhi high court order of 28 April.
Tata Sons shall take requisite permissions from the Competition Commission of India (CCI) and tax authorities to remit the amount in lieu of shares to be transferred to Tata Sons as per the consent terms, Tata Power said in the statement.
Justice S. Muralidhar rejected Reserve Bank of India’s (RBI) intervention in the enforcement of the arbitral award that had been agreed to by both parties. The court upheld the validity of the arbitration award and directed the parties to proceed with the consent terms flowing from it. It was directed that the money deposited with the court would be transferred to an account in the name of Tata, on obtaining a clearance certificate from the CCI.
In April 2014, NTT DoCoMo had decided to sell its entire 26.5% stake in Tata Teleservices and withdraw from mobile telephony in India. Under the original agreement between Tata and NTT DoCoMo, the latter had the right to request a buyer for its stake at a fair market price or 50% of its acquired price, amounting to Rs7,250 crore, whichever was higher. In January 2015, NTT initiated arbitration proceedings against Tata Sons, claiming the latter failed to fulfil its obligation to find a buyer for DoCoMo’s stake in Tata Teleservices Ltd.
Source: Mint