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Mr and Mrs Roy, the promoters, collectively hold 33-ish% in their individual capacities. They hold another 29.18% through RRPR Holdings, a PLC they floated.
VCPL, a subsidiary of AMNL (the media and entertainment arm of the Adani group) had apparently issued a loan to the Roys/NDTV (not clear on this) in 2009, against share warrants convertible into shares in RRPR Holdings. Now, VCPL has opted to convert the warrants into shares of RRPR, giving them control of the holding company and thus a 29.18% stake in NDTV.
Questions:
1. Why do promoters divide their holdings like so, holding a part of the shares individually and a part through PLCs, trusts etc? This is the case even for other companies like Nykaa. Is it for convenience of raising funds through debt by pledging only a part of the shares they hold while safely retaining the shares they hold individually, as was done in this case? Ultimately, doesn't it just come down to the contract? Even if the Roys held the entire 62% in their individual capacities, while signing a loan agreement they could've still just pledged 29.18% of their stake, right? Or am I missing something here?
2. How do share warrants differ from convertible preference shares or convertible debentures (optionally/compulsorily, partially/fully)?
3. Aren't there protection clauses for the promoters in such debt transactions? That the warrants may be converted only under certain circumstances or trigger events (such as missing a payment) or after taking consent or something? The debt just perpetually hangs as the Sword of Damocles over the promoters, that VCPL may any day just decide to convert the warrants and acquire 29.18% stake in NDTV? If that is the case, then isn't it rather foolish of the promoters not to have anticipated this, given the current political climate?
4. Can the takeover be prevented by refinancing the debt NDTV/Roys owe to VCPL? That they obtain the amount from somewhere else and pay it off in one go, thus terminating their obligations and cancelling the share warrants? Is that still an option? Would that have been an option before VCPL opted to convert the warrants?
Thanks in advance!
5. Apparently, the loan that VCPL had issued in 2009 was an INTEREST-FREE loan of 400 Crores. How does that work? Such a long-term loan of such a huge amount, with no interest? I'm assuming this might have something to do with #3, why there were no protections in place. But generally, what does a lender get in such an arrangement?