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Strategy
Vodafone Idea’s bold equity move sparks investor confidence amid criticism
Synopsis
Vodafone’s board has approved the issuance of preference shares to its creditors, a rare strategic move among listed companies. The decision aims to manage cash flow and address outstanding dues, but will it benefit shareholders?
On June 14, 2024, prominent banker Uday Kotak critiqued the practice of issuing equity to creditors as a method of debt repayment. Without naming Vodafone Idea (Vi), Kotak in a post on X (formerly Twitter) wrote, “Financial markets create money out of thin air? A model for companies in financial difficulty: issue equity to creditors to repay their debt. If the stock is well traded, the creditor can sell in the market and get paid by investors.”
( Originally published on Jun 27, 2024 )
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