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SEBI clears biggest media deal of TV18 and Network 18

Mumbai, Aug 29 (): Paving way for one of the largest media deals inked earlier this year,the Securities and Exchange Board of India (SEBI) has cleared the way to the twin-rights issues of TV 18 Broadcast and Network 18.

In March, both companies had filed offer documents and on August 17
SEBI issued observations to rights issue documents in its weekly disclosure of processing status of offer documents.

Rs 5,000 crore will be raised between them from the rights issues, which will be used for the funding of the acquisition of channels of Andhra-based Eenadu network and paying of the group’s debt.

Reliance Industries, a beneficiary of independent media trust, will fund promoters of Network 18 and TV 18 subscribe to rights issues. The proceeds will be used by companies from the rights issues to complete the acquisition of ETV.

Network 18 will use Rs 1,384 crore to subscribe to the rights issue of TV 18 Broadcast from the Rs 2,700 crore raised through the rights issue, so as to keep its stake above 50 per cent. Rs 1,182 crore will be used to repay loans, Rs 1,925 crore will be used by TV18 to complete the ETV acquisition. Remaining Rs 421 crore will be used to repay loans.

Equator owns a firm called Panorama, which controls ETV’s News Channels business and has a stake in Prism that owns ETV’s entertainment channels and 24.5 per cent in Eenadu, which owns the Telugu news channels. TV 18 will buy out Equator. For Rs 1,925 crore Altitude and Kavindra, which together own Equator, will sell their holdings to TV18.

Network 18 and TV18 entered into a share purchase agreement with Equator, Altitude and Kavindra upto February 28, 2015. As per the Trademark License Agreement, Eenadu has granted an irrevocable, exclusive and royalty free license ETV trademarks and ETV brand names but hinted that the TV18 group may not continue using the trademark of ETV.