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LIC upset Vedanta's delisting plan; shareholders' demand unaffordable

Nevin John     October 12, 2020

Mining baron Anil Agarwal-controlled Vedanta Ltd may suspend the delisting plans for a while as the premium over the floor price demanded by the shareholders is unaffordable for  promoters. "Revisiting the same plan now will be financially impossible. But the promoters will keep it as an option to execute as and when the discrepancy in market price and book value arises again," said people in the know.

It is the state-run insurer LIC, which holds 6.37 per cent stake in Vedanta, who has upset the delisting plans and submitted all its shares at Rs 320 a piece, which is 267 per cent premium to the floor price of Rs 87.25. LIC's bid price has become the discovered price in the reverse book building process, while many others also bid at the price of Rs 320. Another set of investors tendered the shares at Rs 150-160.

Agarwal will discuss the future plans with the management committee on Monday as the delisting plans of Vedanta Ltd failed to garner the required number of shares. The company said the total number of shares validly tendered by the public shareholders in the delisting offer is 125.47 crore, which is less than the minimum number of shares required to be accepted by the acquirers.

The promoters will return the shares tendered in the delisting process to the respective public shareholders. According to the Indian delisting law, the companies will have to acquire shares from public shareholders at the discovered price (bod price) found in the reverse book building process. The process needs approval from 90 per cent shareholders.

The present share price of Vedanta at Rs 121 is about 38 per cent higher compared to the indicative offer price of Rs 87.5 a share given by the promoter group on May 12. The market capitalisation of Vedanta stands above Rs 45,000 crore. The public holds about 49.5 per cent stake in Vedanta.

Agarwal-led promoters wanted to buy the shares held by pubic back at a cost of Rs 16,000 crore. The price at which LIC tendered the shares will make the delisting costlier by around Rs 40,000 crore. Kotak Securities earlier said in its report that the promoters can pay up to Rs 139 per share to delist through fundraising.

In the January-March quarter, Vedanta wrote off Rs 17,132 crore from books on impairment of assets in oil and gas, copper and iron ore businesses. It resulted in reduction in book value to Rs 89 from Rs 147. Because of the write-off, the company posted Rs 12,083 crore net loss.

Also read: Vedanta delisting fails; tendered shares to be returned to shareholders

Also read: Vedanta gets in-principle nod for delisting from BSE, NSE

Also read: Trade regulator trashes unfair business practices complaint against Hindalco, Vedanta

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