Unitech Wireless gets Supreme Court go-ahead for rights issue

Unitech Wireless, which offers cellular services under the brand Uninor, is free to go for the proposed Rs6,700 crore rights issue.

In a major relief to the company, which was facing resistance from Unitech, one of the joint venture partners, the Supreme Court on Friday scrapped the Punjab & Haryana High Court order that prevented it from carrying out the proposed issue.

A bench of Justice RV Raveendran and Justice AK Patnaik said the high court’s interim order on the plea against a Gurgaon district court mandate of March 1 would be operational for three weeks.

The judges directed the high court to rehear the pleas of Unitech and Telenor.

Telenor holds 67.25% stake in Unitech Wireless, which has operations in 13 circles. The rest is collectively held by four Unitech entities — Unitech, Cestos, Unitech Wireless, Simpson Unitech Wireless and Acorus Unitech — on whose plea the district court had restrained the joint venture from giving effect to any board resolution regarding the Rs6,700 crore rights issue.

The order was challenged by Unitech Wireless and its majority shareholder Telenor in the high court, which on July
4 dismissed their plea and upheld the district court order saying there was no need to intervene.

The two firms had told the high court that to meet their rollout obligations, they needed funds worth Rs6,700 crore as they had failed to get assistance from any financial institutions.

“When it was clear that in the present circumstances prevailing in the telecommunication industry, any funding through long-term loans was practically impossible to avail, the management of the petitioner (Telenor and Unitech Wireless) recommended to its board that the necessary funding be obtained by raising additional share capital through a right issue,” said the firms.

Their contention was contested by the four shareholders saying it was against the shareholding agreement.