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IMG split over VSNL pay-out issue

BS Corporate Bureau

The inter-ministerial group meeting on May 25 has failed to take any decision on the proposed 'special dividend' to Videsh Sanchar Nigam shareholders prior to its divestment.

VSNL has a cash reserve of over Rs 40 billion. Though the IMG members have discussed the issue on Friday, some members had opposed such a move.

"Another round of discussion will be held soon to take a final decision on this," a Department of Telecommunication official, and a member of the IMG said.

Some members felt that any payout in the form of special dividend will have a bearing on the valuation of VSNL. But another section of the members said it would be a good opportunity to offer a return to the government.

If the government does not get any special dividend, the entire cash reserve will go to the hands of the strategic investor who will pick up a 25 per cent stake. The investor is also to make a 20 per cent open offer.

The meeting also could not take any decision on whether to stop the scam-stained companies - Videocon and BPL - from bidding for the government stake in the state-run company. Both Videocon and BPL promoters have been charged by the Securities and Exchange Board of India in a price rigging issue.

As Videocon and BPL have roped in strategic partners to bid for VSNL and these bidders are independent from the scam-stained companies, they may not face any hurdle for staying in the race, VSNL sources said.

The Department of Divestment has recently decided to complete the sell-off of the government stake in VSNL by August. The prospective bidders include Tata, Reliance, the AV Birla group, BPL, Videocon and Bharti.

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