The share buy could take RIL's aggregate ownership in Kishore Lulla-led Eros to 9.99%
Mukesh Ambani-controlled Reliance Industries Ltd (RIL) may buy 4.99% more stake in NYSE-listed film entertainment firm Eros International. This could take RIL's aggregate ownership in Kishore Lulla-led Eros to 9.99%. India's largest private sector company on August 7 had announced the completion of 5% equity stake purchase for $46.67 million (about Rs 320 crore).
RIL completed the 5% acquisition by subscribing to 3,111,088 'A' ordinary shares of Eros at $15 per share for cash. The investment was made by RIL directly.
On September 5, RIL in a regulatory filing about its Eros investment with US Securities and Exchange Commission said that a certain number of shares are available for purchase pursuant to an option. "... to purchase such number of shares not to exceed an aggregate ownership by the reporting person of 9.99% of the total issued and outstanding A Ordinary Shares," the RIL filing said.
The market value of Eros stock has dropped 20% from its 52-week high of $15.45/share hit on July 10 to about $12.30 apiece on September 21. At present, a 4.99% stake purchase in could cost RIL $42.4 million.
On September 17, Eros International in a separate SEC filing said: "Reliance is party to an option agreement with the company pursuant to which Reliance has the option to purchase such number of A ordinary shares not to exceed an aggregate ownership of 9.99% of the then issued and outstanding A ordinary shares on the date of exercise."
Based on the number of A ordinary shares outstanding as of September 7, 2018 (and assuming no conversion of any B ordinary shares outstanding as of such date), such option would permit RIL the purchase of up to an additional 3,450,962 additional A ordinary shares of Eros. "Such option is exercisable at any time until February 28, 2019," said Eros.
Eros has aggregated rights to over 3,000 films in its library. Eros Now, its digital OTT entertainment service, has rights to over 11,000 films, out of which approximately 5,000 films are owned in perpetuity. Eros Now had over 100 million registered users and over 7.9 million paying users in March 2018.
RIL and Eros International Media (Eros India) have already announced an agreement to partner in India to jointly produce and consolidate content from across India. The parties will equally invest up to Rs 1,000 crore in aggregate to produce and acquire Indian films and digital originals across all languages.
MOPPING UP
- The share buy could take RIL's aggregate ownership in Kishore Lulla-led Eros to 9.99%.
- The market value of Eros stock has dropped 20% from its 52-week high of $15.45/share hit on July 10
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The market value of Eros stock has dropped 20% from its 52-week high of $15.45/share hit on July 10 to about $12.30 apiece on September 21. At present, a 4.99% stake purchase in could cost RIL $42.4 million.
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