Vedanta fails to muster 90% shares needed for delisting
09 October 2020
Vedanta Ltd’s controversial delisting plan crumbled in the face of opposition by investors as per data available on the Bombay Stock Exchange (BSE) website. Vedanta promoters could muster only 1,254.7 million shares tendered against the required 1,341 million shares to successfully delist from the exchanges.
As per the demand schedule released by the BSE at 7.30 pm on Friday evening, of the total 1,371 million shares tendered, only 1254.7 million shares were confirmed bids while 123.2 million shares tendered are yet to be confirmed.
Public shareholders hold a total of 1697.3 million shares of the natural resources metals major, and billionaire Anil Agarwal needs at least 90 per cent of outstanding shares to take Vedanta public.
The share buy-back through a five-day reverse book building (RBB) process closed on Friday evening after BSE gave time till 7.00 pm for the bids to close following some glitches in the tendering process.
Bankers and custodians were unable to provide final confirmation of the bids received for 123.1 million shares.
News reports suggest that two large mutual funds have tendered their shares at Rs153 and Rs160 per share respectively. LIC, which holds a 6.37 per cent stake in Vedanta Ltd, tendered all its shares at a price of Rs320, a 267 per cent premium over the floor price of Rs87.50.
DAM Capital and JP Morgan, bankers to the delisting offer, have reportedly asked market regulator Securities and Exchange Board of India (Sebi) for a one-day extension of the delisting process in view of the glitches. Sebi’s response, however, is not yet known.
Vedanta had sent postal ballot notice on 25 May 2020 to seek shareholders' approval for the delisting offer by way of special resolution through postal ballot and e-voting. Further, after is approved by a 2:1 majority of public shareholders, the company proceeded with the delisting offer.
Post shareholders' approval, the company would be required to apply to stock exchanges seeking their in-principle approval.
Following the in-principle approval, promoter will make a public announcement and dispatch letter of offer (containing material information in relation to the delisting offer) along with bid form to the public shareholders.
The final exit offer price will be determined as the price at which equity shares accepted through eligible bids, that takes the shareholding of the promoter (along with the persons acting in concert) to at least 90 per cent of the paid-up equity share capital of the company, excluding the equity shares which are then held by a custodian and against which ADS have been issued.
Upon the discovery of the final exit offer price, the promoter will have the option either to accept or reject the final exit offer price. In case, the final exit offer price is not acceptable to the promoter, it will have an option to make a counter offer within two working days from the discovery of final exit offer price.
If the delisting offer is successful, the promoter will be required to pay the consideration to public shareholders within 10 working days of the closure of the bidding period.
After payment of consideration, the company would make the final application to the stock exchanges. Upon receipt of their approval, equity shares will be delisted.