“The Equity raise gives the company funds required to meet its payment obligations and repay its dues and meet its working capital requirements,” IiAS has said in a note.

VIL plans to issue 3.38 billion new shares at Rs 13.3 apiece to its promoters Aditya Birla Group (through Oriana Investments) and Vodafone Group (through Euro Pacific Securities and Prime Metals). The issue price is 25 per cent higher than VIL’s Monday’s closing price of Rs 10.07.

IiAS said the issue price follows the formula prescribed in Sebi’s ICDR Regulations (Issue of Capital and Disclosure Requirements). The rule says the issue price should be higher than the 90-day volume-weighted average and 10-day volume-weighted average.

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About 40 per cent of the Rs 4,500 crore will be used for making payments to Indus Towers, an associate company that provides passive infrastructure services on a co-sharing basis.

The remaining will be used for general corporate purposes. VIL also plans to raise an additional Rs 10,000 crore in the near term from institutional investors to take on telecom rivals Reliance Jio and Bharti Airtel. This could be raised through a private placement of shares in more or more tranches.

IiAS has also recommended a ‘for’ vote on the resolution about the issue of equity-linked securities to raise to Rs 10,000 crore. The voting advisory firm has said while the issuance could lead to colossal dilution, the company would require additional capital for repayment of existing debt.