The Essar group today issued a statement saying that it has informed its shareholders about the proposed merger scheme of Essar Telecommunications Holdings Private Limited (ETHPL) and India Securities Ltd (ISL) and that Vodafone has no right to raise any objections to the merger since it is not a shareholder of either company.
Clarifying on the news item "Vodafone objects to Essar Group's reverse listing of holding company", appearing in a financial newspaper, India Securities Ltd (ISL) said in a filing with the Bombay Stock Exchange (BSE) that Vodafone has no locus standi to raise such objections to the merger since it is neither a shareholder nor a creditor of both Essar Telecommunications Holdings Private Limited (ETHPL) and ISL (See: Vodafone miffed over partner Essar's merger move).
Essar said that the company has informed its shareholders about the merger scheme in detail through an explanatory statement annexed to the notice convening the meeting of the equity shareholders.
Further, the fact that Essar Group's 10.97 per cent stake in Vodafone Essar Limited would become a part of ISL, post merger, has been known to the shareholders of ISL since the same has been appearing in the annual report of ETHPL, valuation reports for calculating share swap ratio etc which were available for public inspection for nearly one month. Also, the scheme clearly mentions the fact that the merger would result in the transferee company (ie, ISL) becoming a stakeholder in a leading telecom company in India in which Essar Group holds stake.
According to Essar, the investment is also contrary to ISL's stated investment intention.
"It must be noted that post merger ISL would have the right to decide whether it intends to carry on the business proposed to be carded out by its wholly owned subsidiary," Essar said in its release.