The financial creditors of the debt-ridden Videocon Industries will get 8 per cent equity in the entity created by the merger of 11 group companies with the firm as per the resolution plan, according to a public notice.
As per the road map of the approved resolution plan of Anil Aggarwal's Twin Star Technologies, two listed entities of the group - Videocon Industries Ltd (VIL) and Values Industries Ltd (VAIL) - will be delisted.
After this, all 11 group companies including VAIL, for which a combined insolvency resolution process was conducted, would be amalgamated into Videocon Industries Ltd.
However, Videocon Telecom Ltd would be a subsidiary company of the merged entity.
"... as an integral part of this resolution plan, the converted debt shall be converted into the financial creditors equity shares, such that the financial creditors own 8 per cent of the total shareholding of VIL post such conversion," it said.
Equity shares of VIL, owned by Twin Star Technologies, having a face value of Rs 10 per fully paid-up equity share capital shall be issued to the financial creditors "in proportion to their respective portion of the converted debt", it added.
Such financial creditors equity shares shall be subject to a three-year lock-in period from the Closing Date.
"After the expiry of the lock-in period, the implementing entity shall be entitled to a first right of refusal to acquire the Financial Creditors Equity Shares (or portion thereof) on terms which shall be no less favourable than the terms so offered by the financial creditors to any third party transferee," it added.
Shareholders of two listed companies - VIL and VAIL - will receive "nil" money at the time of delisting as the liquidation values of the two firms are not even sufficient to cover outstanding debt.
There will be no offers to any shareholders of the two companies at the time of delisting of their shares, the firms said in a public notice on Friday.
Delisting process has already been started as June 18, 2021 has been fixed as the "record date" for the purpose of delisting of equity Shares from the BSE and the NSE.
After delisting, 11 group companies would be merged in VIL, which are - Applicomp, CE India, Century Appliances, Electroworld Digital Solutions, Evans Fraser & Co, Millennium Appliances, PE Electronics, SKY Appliances, Techno Electronics, Techno Kart and Value Industries.
On June 9, the Mumbai bench of the National Company Law Tribunal had approved Rs 2,962.02 crore resolution plan by Twin Star Technologies.
In its 47-page-long judgement, NCLT while approving Twin Star Technologies' bid had observed creditors of Videocon Industries will be taking nearly 96 per cent haircut on their loans and the bidder is "paying almost nothing".