Tata Sons to seek CCI, tax authorities nod for DoCoMo payout
Tata Sons will seek the approval of the Competition Commission of India and tax authorities to remit USD 1.18 billion to estranged partner NTT DoCoMo to settle its long-standing dispute.
"As per the...Order of the Delhi High Court, Tata Sons will take necessary permissions from the Competition Commission of India and tax authorities to remit the amount in lieu of shares to be transferred to Tata Sons as per the consent terms," Tata Power said in a regulatory filing.
Last week, the Delhi High Court rejected the Reserve Bank of India's objections in the Tata-DoCoMo case, clearing the decks for the Tatas to pay over USD 1.1 billion to the Japanese telecom major.
Tata Group had been locked in a legal battle with DoCoMo over the alleged breach of contractual obligations pertaining to the Indian joint venture - Tata Teleservices (TTSL).
"In terms of the...Agreement dated March 25, 2009, Tata Power is to acquire 118,222,767 (11.82 crore) equity shares of TTSL. As on the date of the arbitration award that is June 22, 2016, USD 117,128,573 (117.1 million) was payable by Tata Power for the same," Tata Power said today in the BSE filing.
The final amount that is payable would be determined on the date of the payment to DoCoMo and would, therefore, "vary" over the amount indicated, it clarified.
Tata Power has remitted Rs 790 crore to Tata Sons on August 09, 2016 and this "will be appropriately adjusted" against the amount governed by the stipulated terms and conditions.
It may be recalled that the two sides had gone for arbitration as the Indian company was not able to find a buyer for the Japanese telecom major's 26.5 per cent stake in their joint venture, when it exited from it.
As per the shareholding agreement, on DoCoMo's exit from the venture within five years, Tata was to find a buyer who would purchase the Japanese company's stake at minimum 50 per cent of the acquisition price, which came to around Rs 58.45 per share.
The other option was Tata purchasing the shares at the fair market value, which was Rs 23.44. However, this was not acceptable to DoCoMo and it had opted for arbitration.
The London Court of International Arbitration or LCIA in June 2016 awarded damages of about USD 1.1 billion in favour of DoCoMo for Tata's inability to find a buyer as per the shareholding agreement.
Thereafter, DoCoMo moved the Delhi High Court for enforcement of the award after Tata cited refusal of permission by the RBI to make the payment.
The Delhi High Court ruling, last week, facilitates the payout by Tatas to DoCoMo. In a late evening regulatory filing, Tata Communications said that amount deposited by Tata Sons in the court by way of fixed deposit receipts, together with interest accrued, will be retained by the registrar of court till the clearance from CCI and Withholding Tax Certificate is obtained.
Post this, the funds will be returned to Tata Sons for onward payment to DoCoMo, the filing said.
Tata Communications said it was to acquire 158.3 million equity shares of Tata Telservices at a value of about Rs 1,058 crore as a result of the award.
"On August 2, 2016, Tata Communications paid to Tata Sons about Rs 1,058 crore as recoverable advance in anticipation of satisfaction of the award and receipt of the TTSL shares," it said, adding that the final amount payable by the company to Tata Sons could vary.