MUMBAI: The minimum amount of Rs 9.96 billion that Reliance Industries Ltd?s (RIL) Independent Media Trust (IMT) will lend to ensure the currently open rights issues of Network18 Media and Investments and TV18 Broadcast sail through will translate into a 51 per cent stake in the promoter companies of Network18.

IMT will lend the money through investments in zero coupon optionally convertible debentures (ZOCDs) issued by the six promoter companies of Network18, which will be subscribing to promoters? entitlement in the rights issues and in addition, to subscribing to the unsubscribed portion in the rights issues and to subscribe to additional equity shares.

The six promoter companies are RRB Mdiasoft, RB Mediasoft, RBI Media Holdings, Watermark Infratech, Colorful Media and Adventure Marketing, which together own 36.90 per cent of Network18. To subscriber to their entitlement, these companies require Rs 9.96 billion. To raise Rs 9.96 billion to subscriber to their entitlement, the promoter companies will have to issue a minimum of 99,630,000 ZOCDs.

By subscribing to their entitlement and unsubscribed portion, if any, in this Issue, the promoter companies will hold more than 36.90 per cent of the post-issue paid up equity share capital of the Issuer.

If the ZOCD holder opts for conversion of the minimum 99,630,000 ZOCDs, then it will result in the ZOCD holder holding more than 51 per cent of the promoter companies. In the event of conversion of the ZOCDs, there will be a change of control of the subscribing companies. Such change of control of the promoter companies may in turn result in a change of control in the company.

Considering that Network18 is already in control of TV18, the acquisition of control of Network18 by the ZOCD holder may consequently result in change of control of TV18. A change of control of the companies may significantly influence our business, policies, and operations, Network18 & TV18 have said in the rights issue prospectus.

Television channels that are owned by TV18 include news channels CNBC TV18, CNBC Awaaz, CNN IBN, IBN7 and IBN Lokmat, and general entertainment channel Colors and factual entertainment channel History TV18.

The promoter companies are owned and controlled by Raghav Bahl, Founder of Network18 group and Ritu Kapur.

Network18 is offering 307 shares for every 50 shares held by its shareholders at a price of Rs 30 per share, while TV18 is offering 41 shares for every 11 shares held by its shareholders at a price of Rs 20 per share.

The six promoter companies have confirmed vide their letter dated 29 February 2012 that they intend to (i) subscribe for additional equity shares and (ii) subscribe to the unsubscribed portion in the rights issue, if any. Such subscription to additional equity shares and the unsubscribed portion, if any, to be made by the promoter companies, will be in accordance with the Takeover Regulations and also shall not result in breach of minimum public shareholding requirement as stipulated in the listing agreements, Network18 and TV18 have said.

The promoter group holding in Network18 is 49.55 per cent, including 11.14 per cent by Network18 Group Senior Professional Welfare Trust and 0.40 per cent by TV18 Employees Welfare Trust. Network18 group owns 59.76 per cent of TV18.

The promoter companies each have a paid-up and issued share capital of Rs 0.1 million comprising 10,000 equity shares of Rs 10 each. As per the ZOCD Investment Agreement, the promoter companies will issue such number of ZOCDs to IMT to enable them to subscribe to their entitlement, additional Equity Shares and unsubscribed equity shares in the Issue with the proceeds of the ZOCDs. The investment agreement has provided that if the response to rights issue from non-promoter shareholders is poor, the promoter companies will subscribe to additional shares and also to the unsubscribed portion.

TV18 will be acquiring 100 per cent of the equity of Equator, which owns 100 per cent equity of Panorama, the owner of ETV News Channels; 50 per cent of Prism which owns ETV non-Telugu channels; and 24.50 per cent of Eenadu which owns ETV Telugu Channels.

Each ZOCD to be issued to IMT will be of Rs 100 each convertible into 10 equity shares of the respective promoter company. These ZOCDs are also freely transferable. The holder of the ZOCDs has the option to convert all or any of the ZOCDs into 10 equity shares for each ZOCD held, of the relevant promoter company at any time within a period of 10 years from the date of subscription of the ZOCDs by IMT.

Further, the holder of the ZOCDs has the option to require all or any of the promoter companies to redeem some or all of the ZOCDs at par at any time within a period of 10 years from the date of subscription of the ZOCDs. The ZOCDs which have neither been converted into equity shares nor redeemed shall be automatically redeemed at par upon the expiry of 10 years from the date of subscription of the ZOCDs.