The National Company Law Tribunal (NCLT) has approved Radio City parent Music Broadcast Ltd’s (MBL) scheme of arrangement for the issuance of non-convertible non-cumulative redeemable preference shares (NCRPS) on a preferential basis by way of bonus to its non-promoter shareholders.
In an order dated December 23, the NCLT accepted the clarifications and undertakings given by Music Broadcast, which runs 39 FM radio stations.
“From the material on record, the scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy,” it added.
The company said it will intimate the stock exchanges once the record date is fixed for the purpose of determining the eligibility of non-promoter shareholders to receive bonus NCRPS.
MBL is a subsidiary company of Jagran Prakashan, which holds 74.05% stake in the company.
As per the scheme of the arrangement, filed by the company through law firm Hemant Sethi & Co, the face value of NCRPS will be Rs 10 each issued at a premium of Rs 90 per NCRPS to be redeemed on the expiry of 36 months at a premium of Rs 20 each.
The size of the bonus issue is Rs 90 crore which can be redeemed three years after the issue date with a redemption premium of Rs 18 crore.
As of September, Music Broadcast had cash and cash equivalents of Rs 284 crore.
The company has stated that the rationale behind the scheme of arrangement is to garner the support of its public shareholders at a time when the FM radio business is going through a difficult phase.
The ad revenue of FM radio companies plummeted to record lows in the last two years due to the Covid-19 pandemic. While the ad revenue has witnessed some recovery, it is yet to reach pre-pandemic levels.
According to the Telecom Regulatory Authority of India, the cumulative ad revenue of 388 private FM Radio channels stood at Rs 345.12 crore in Q1 FY23.
A GroupM report stated the ad market size of radio almost halved to Rs 1,436 crore in 2020 from Rs 2,824 crore in 2019. The ad market rose to Rs 1,581 crore in 2021 and is projected to reach Rs 1,657 crore this year.
Music Broadcast applied for the approval of its scheme of arrangement to the NCLT’s Mumbai Bench on February 3, 2021. The scheme was formulated by the company’s board on October 22, 2020. The company’s shareholders and unsecured creditors approved the scheme on June 23, 2022.
