MUMBAI: Confusion reigned over the fate of India’s biggest delisting offer with bankers to Vedanta Resources unable to supply final confirmation of the bids received to the stock exchanges till late Friday night.
Billionaire Anil Agarwal’s Vedanta NSE 3.35 % seemed to have successfully completed the method of delisting its Indian subsidiary Vedanta Ltd going by the bids received till late afternoon but bankers and therefore the custodians were unable to supply final confirmation of the bids received for 137 crore shares.
The demand schedule released by the BSE at 7.30 pm showed only 125.47 crore confirmed bids against the specified 134.1 crore shares. About 12.32 crore shares tendered are yet to be confirmed, the BSE data showed.
A technical glitch seemed to be behind the confusion with bankers to Vedanta — DAM Capital and JP Morgan — approaching the Securities and Exchange Board of India for extending the confirmation deadline by another day. Sebi had not approved the extension till the time of gong to continue Friday night.
The development compounds the matter for Vedanta already grappling with the likelihood of a counter offer after a late intervention within the bidding process by the country’s largest insurer and largest investor, life assurance Corporation, hiked the value of the delisting considerably.
LIC, which held 6.37 per cent in Vedanta Industries, submitted all its shares at a price of Rs 320, a 267 per cent premium over the ground price of Rs 87.25 upsetting Vedanta’s calculations. The LIC price is now the discovered price for the reverse book building process. Vedanta, if it accepts the worth , has got to offer all shareholders Rs 320 per share against the ground price of Rs 87.25. Many other investors too bid at Rs 320 but tons of bids were also submitted at Rs 150-160 per share.
Vedanta Resources chairman Anil Agarwal told ET that the group is exploring all options including a counter offer if required. “We are very reasonable to our shareholders and that we will consider a counter offer by considering the funds available with us including the loans,” said Anil Agarwal. “Most of the shareholders have tendered their shares between Rs 140-160 and that we are very positive towards closing the delisting process successfully.”
Vedanta Resources had availed a credit facility of $3.15 billion by pledging its 50.13 per cent stake in Vedanta Ltd. This amounts to around Rs. 23,200 crore and implies that funding arrangement of minimum Rs 127 per share for purchasing all 169 crore public shares of the corporate including those held as American Depository Receipts (ADRs). But if Vedanta is to shop for only 137.4 crore shares, the funds available would imply that it buys these shares at Rs 169 per share.
Vedanta Group can make a counter offer on Tuesday October 13 at any price above the value of Rs 89.38, if the discovered price isn’t acceptable to them. If successful, this is able to be the most important delisting in Indian corporate history.
Indian delisting rules require all companies to supply to shop for shares from public shareholders at a `discovered’ price through a reverse book building process. the method requires 90 per cent acceptance from all shareholders. The discovered price refers to the price of the shares which help the method cross the edge or acceptance level. as an example , within the case of Vedanta, about 90 crore shares were tendered below Rs 160 per share, and 15 crore shares were tendered between Rs 160 and Rs 300. About 32 crore shares were offered at Rs 320. This 32 crore shares took the entire cumulative quantity tendered to 134.1 crore shares which meets the 90 per cent threshold. therefore the discovered price was Rs 320.
Share of Vedanta gained 3.7 per cent on Friday to shut at Rs 121.95 on BSE.
Market sources said two large mutual funds have tendered their shares at Rs 153 and Rs 160 per share respectively.
Stakeholders Empowerment Services, a proxy advisory firm had recommended that shareholders must offer their shares during a range of Rs 236-310 per share.
Last month Baring Private Equity Asia successfully closed the delisting process of IT company Hexaware Technologies by accepting the discovered price of Rs 475 a share against Rs 285 offered initially to minority investors.
The biggest delisting thus far in India was from the Essar group which took Essar Oil private after paying Rs 3,745 crore in 2015. The discovered price in Essar Oil was 146 per cent premium to the offered price. In early 2019, the delisting process of Linde India failed after investors demanded a premium of 517 per cent over offered price.
If Vedanta Resources doesn’t make a counter offer or if the counter offer too fails, then the shares are going to be returned to shareholders and therefore the company will still be listed.