State-run miner National Mineral Development Corporation Ltd (NMDC) is gearing up to seek shareholders' nod for a special resolution to enable the company to initiate a share buyback worth an aggregate Rs7,527.75 crore.
In a regulatory filing with the BSE, the mining major said the company will seek shareholders' nod through a postal ballot for buyback of 80,08,25,256 (800.8 million) equity shares from all the members holding equity shares of the company.
The board of directors of the company at its meeting held on 7 June 2016, approved buyback of up to 80,08,25,526 equity shares of the company, from all the members holding equity shares of the company on a proportionate basis.
The stake sale is subject to the approval of the shareholders of the company by way of special resolution through postal ballot and subject to approvals of statutory, regulatory or governmental authorities as may be required under applicable laws.
The buyback, to be made through the ''tender offer'' route in accordance with the Companies Act, the Management Rules, the Securities and Exchange Board of India (Buy back of Securities) Regulations, 1998, will be at a price of Rs94 per equity share of face value of Re1 each payable in cash for an aggregate consideration not exceeding Rs7527,75,99,499, NMDC stated in a regulatory filing.
The buyback will not exceed 25 per cent of the aggregate of fully paid-up share capital and free reserves of the company as per audited accounts of the company for the financial year ended 31 March 2016 (the last audited financial statements available as on the date of board meeting recommending the proposal of the buyback).
The aggregate consideration of the stake sale will not exceed Rs7,527.75 crore, it added.
The company has engaged NSDL to provide the facility of casting of votes by using electronic voting system. Voting through the physical postal ballot from and through e-voting shall commence on 4 July and end on 2 August 2016.
The process of share buyback leads to acquisition of shares by the company itself. The objective of the buyback is to return surplus cash to the members holding equity shares of the company.
The board has decided to recommend buyback of 20.20 per cent of equity shares.
NMDC sees the buyback help in improving return of equity by reduction in equity base, thereby leading to long-term increase in shareholders' value.
The company shares ended at Rs 94.35, up 0.59 per cent on the BSE.