The board of Tata Communications today approved demerger of around 773 acres of surplus land to a separate company and listing it subsequently.
Tatas had, in 2002, acquired 25 per cent government stake in VSNL. It had subsequently bought another 20 per cent in the then monopoly overseas calls carrier to raise its stake to 45 per cent. The government retained about 26 per cent stake in the company.
The terms of that sale required surplus land of VSNL to be "hived off or demerged into a separate company," Tata Communication said in a regulatory filing.
The land will be transfered to an SPV (special purpose vehicle) created for the purpose 'Hemisphere Properties India Ltd', which will apply for listing of shares.
Existing shareholders of Tata Communications will get one share in Hemisphere Properties for every one share they current hold in Tata Communications.
"There will be no change in the shareholding pattern of the company pursuant" to the demerger, Tata Communications said.
Tata Communications, which owns the world's largest submarine fibre network, is exploring possibility of acquiring the enterprise business and fixed line assets of Tata Teleservices after the debt-laden firm's mobile phone unit is acquired by Bharti Airtel.
HPIL is the SPV formed through a cabinet decision in 2005 to execute the transaction on surplus VSNL land.
"...the board of directors of Tata Communications Limited at it meeting held today...has approved a draft scheme of arrangement and reconstruction between Tata Communications Limited...and Hemisphere Properties India limited... and their respective shareholders," Tata Communications said in a BSE filing.
HPIL board has already approved the scheme of arrangement and reconstruction between Tata Communications and the company.
Tatas had acquired the state-owned company in 2002. However, the deal did not include 773.13 acres of VSNL's land assets, lying unused post acquisition of the PSU.
Under the proposed scheme, HPIL will issue fully paid-up equity to shareholders of the company in ratio of 1:1 with face value of Rs 10 per share.