The total transaction value is just under Rs 1,900 crore. Of this ZMCL will pay Rs 1,592 crore for the radio business, while ZEEL will pay Rs 298.4 crore for the TV business.
Due to regulatory constraints, ZMCL will currently be able to acquire only 49 per cent in the radio business. Under the radio auction regulations, the lock-in period for a company acquiring frequencies is three years from the date that the last acquired becomes operational. The lock-in period for the 45 existing frequencies is till March 31, 2018, and for the 14 frequencies acquired in the phase-3 of radio auctions last year, is expected to be up to March 2020.
However, ZMCL plans to fund this deal by taking loans of Rs 700 crore and corporate guarantee of about Rs 1,000 crore. This will be a concern as it will push up the company’s debt-equity ratio which stood at 0.7 times in FY16.