Vodafone Idea (Vi) will seek fresh approval from its shareholders on January 31 over its proposal to pay equipment supplier ATC Telecom Infrastructure Rs 1,600 crore owed through the issue of equity convertible bonds, according to the company’s bourse filing on Thursday.

The company’s update comes after its earlier similar proposal lapsed on December 6, when there was no communication from the government to convert Vodafone Idea’s deferred accrued interest into equity. The government’s equity conversion is one of the conditions for the ATC to accept the bonds to pay its dues.

Last month, the ATC and Vodafone Idea jointly decided to extend the bond issue proposal agreement deadline to February 28, 2023.

“We would like to inform you that a meeting of the Board of Directors of the Company is scheduled for Tuesday, January 31, 2023, in connection with the Priority Issue of OCD (Optional Convertible Debentures) to ATC and the convening of an Extraordinary General Meeting of Shareholders to seek shareholder approval in this regard,” said Vodafone Idea.

In an exchange filing last month, the telecom operator said that issuing bonds to ATC would require the government to convert the interest into equity. The company has opted to convert interest liabilities of about Rs 16,000 crore due to the government into equity, equating to a 33% stake. In contrast, promoters’ stakes will drop to 50% from 74.99%.

However, the government has clarified that the equity conversion will only happen if the promoters first inject capital into the company.

Vodafone Idea owes about Rs 3,000 crore to its signal tower supplier ATC. In November, the company was approved by shareholders to issue up to 16,000 OCDs with a face value of 1 million in instalments. ATC also has the option to convert the dues into equity at $10 per share if not paid within 18 months.

The equity convertible bond has a coupon rate of 11.2% per annum, payable every six months over its term.

“As the company has not received any communication from the Government of India regarding such conversion (conversion of interest into equity), the issuance of OCD to ATC has not been completed within the validity period of the shareholders’ resolution (i.e., from the 15th date of passing of the resolution). Therefore, the shareholder resolution has lapsed,” Vodafone Idea said in a bourse filing.

Recently, ATC and Indus Towers have raised concerns about Vodafone Idea’s ability to pay. For ATC, Vodafone Idea has a payment shortfall of around Rs 3.92 lakh in the July-September quarter.

“As directed by VIL (Vodafone Idea), we would like to defer the confirmation of a similar amount for three months to December 31, 2022, pending resolution. VIL has indicated its intention to perform its entire contract from January 1, 2023 obligations, but cannot guarantee that this will happen,” ATC said in a filing with the SEC.

On the other hand, Indus Towers recently said that the company had made payments up to December according to the agreed payment schedule. Still, from now on, it said it faces challenges in adhering to the higher payment schedule.