Vodafone slams Essar’s plans

TELECOMS giant Vodafone yesterday fell out with its Indian joint venture partner Essar Group which plans to merge its telecoms business – which owns an 11 per cent stake in Vodafone Essar – into its small quoted financial business India Securities (ILS).

In a letter to India’s markets regulator, Vodafone complained that the value of India Securities with that stake “could be misinterpreted” to indicate the “fair market value of Vodafone Essar” with small amounts of buying or selling distorting the price of ISL.

“Vodafone does not wish a company in which it holds a majority interest to become the subject of a false market,” it said.

Essar said that it would respond in due course.

The row emerged as Essar Energy – spun out of parent Essar last year and listed in London – offered $500m (£312.7m) in convertible bonds in a bid to fund its acquisition plans.

The London-listed company plans to use the proceeds raised from the sale of the bonds, priced with a coupon of 4.25 per cent payable semi-annually in arrears, to pursue acquisition opportunities within the power, coal, oil and gas sectors. It could also use funds for general corporate purposes, including to provide financial flexibility for new projects, or to refinance existing debt.