TV18 plans for rights issue of Rs 20 crore

The board of TV18 have met today to approve a rights issue of approximately Rs20 crore. The money will be used to finance the company's ambitious plans to expand its broadcast operations.

Each shareholder of TV18 will be offered the rights shares in a ratio of 1 rights share for every 12 equity shares held. Each rights share will be priced in a band of Rs150-180. The promoters of TV18 have committed to underwrite the issue, by offering to subscribe to the entire un-subscribed portion, if any.

Each share would also entitle the holder to two detachable warrants. Each detachable warrant shall be convertible into one equity share — the first detachable warrant would be converted at the end of 18 months, and the second detachable warrant into another equity share at the end of 36 months. Both these detachable warrants will be converted at a discount of 25 per cent to the average share price prevailing at the time of conversion. Such a unique warrant structure may allow the company to raise cash at much better valuations over the next 3 years and shall ensure that the company is not required to issue any further public equity.

The board also reviewed the implementation of its ongoing expansion project. Phase-1 of this project, viz the new 40,000 sq. ft. broadcast facility, is coming up rapidly at Mumbai. A slew of specialised broadcast equipment, new graphics hardware, OB vans and a second teleport at Mumbai (in addition to the one at Delhi) have already been commissioned. The company expects to launch its new, expanded broadcast operations in the last quarter of the current year.

Commenting at the conclusion of the board meeting, Raghav Bahl, TV18's managing director, said, "We are delighted at the continuing strong financial performance of CNBC-TV18, which has resulted in better-than-expected internal accruals, thereby lowering the amount of dilution required in the rights offering. We remain confident that the current expansion of our infrastructure will significantly upgrade the quality of CNBC-TV18, our existing channel. It will also allow us to launch new broadcast properties and enhance shareholders' value."