Shareholders of debt-ridden Vodafone Idea have approved issuing shares worth Rs 1,600 crore to ATC Telecom Infrastructure on a preferential basis, according to a regulatory filing.

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Vodafone Idea Ltd's (VIL) board has given its nod to settle Rs 1,600 crore dues to equipment vendor ATC Telecom by converting the due amount into equity, if the amount remained unpaid in 18 months.

As per the scrutiniser's report with respect to the voting on proposals during the Extraordinary General Meeting (EGM) held on November 21, as many as 99.99 per cent shareholders voted in favour of the "special resolution for issue of securities on a preferential basis".

The report was submitted as part of the filing by the company to the stock exchanges on Tuesday.

VIL is raising the amount through equity convertible debt bonds that carry a coupon rate of 11.2 per cent per annum payable every six months during its term.

According to the company, the funds raised would be used to pay amounts owed to ATC under the master lease agreements and for general corporate purposes. The maximum term of the Optionally-Convertible Debentures (OCDs) is 18 months from the date of issue and allotment of the first tranche of the OCDs.

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The OCDs provide options to investors to convert the debt into equity in case of non-payment of dues and interest within stipulated timelines.

Earlier, VIL said "the preferential issue would be subject to certain conditions precedent, including inter alia the approval of the shareholders of the company and the Government of India having converted the interest from deferment of Adjusted Gross Revenue (AGR) nd spectrum dues owed by the company".

VIL has opted for converting about Rs 16,000 crore of interest liability payable to the government into equity, which will amount to around 33 per cent stake in the company while promoters' holding will come down to 50 per cent from 74.99 per cent.

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The government has given telecom operators an option of paying the interest for four years of deferment on the deferred spectrum installments and AGR dues by way of conversion into equity of the NPV of such interest amount.

The government is yet to convert the debt into equity.

As on September 30 this year, the company's total gross debt, excluding lease liabilities and including interest accrued but not due, stood at Rs 2,20,320 crore.