The merger of GTL, formerly Global Tele-Systems, with the Redington Group, a Singapore-based infotech firm, will lead to a significant change in the shareholding pattern of the company.
After the merger, the Chanrai group, promoters of the Redington Group, is expected to pick up a 16.81 per cent stake in GTL, while the shareholding of the existing promoters of GTL will reduce to 20.47 per cent. Indian promoters have a 25.5 per cent stake in the company.
The GTL board had decided to acquire Redington for $95 million, of which $50 million was to be paid in cash and the rest through an equity swap.
The board approved on Monday the proposal to issue 14.3 million shares of GTL at Rs 150 a share, face value of Rs 10 and premium of Rs 140, for a consideration of Rs 214.50 crore, or $44.69 million.
With the fresh issue of shares, GTL's share capital will increase to Rs 85.09 crore from Rs 70.79 crore. The merger will take effect from April 1.
GTL promoters said they might adopt the creeping acquisition route to enhance their stake in the company to at least 26 per cent. However, they did not elaborate on the time span or the means of financing the acquisition.
Manoj Tirodkar, chairman and managing director, GTL, said: "We value the customer-vendor relations the Redington Group brings to the merged entity. It will also provide the end-user the entire range of network engineering and infotech services, including need assessment, distribution and support, systems integration, facilities management, managed services and infotech-enabled services."
The Redington Group is expected to generate Rs 2,520 crore (Rs 25.20 billion) revenue and earnings before interest, depreciation and tax amortisation (EBIDTA) of Rs 58 crore (Rs 580 million) during 2002-03.
During the same period, GTL is expected to clock a lower revenue of Rs 575 crore (Rs 5.75 billion), but a much higher EBIDTA of Rs 200 crore (Rs 2 billion). Redington has operations in Southeast and West Asia.
