Proposal will now be put to shareholder vote; shares drop
The board of directors of Vedanta Ltd. on Monday approved a proposal to delist the company.
The nod came after it reviewed the due diligence report submitted by SBI Capital Markets. On May 12, the company received a letter from its promoter firm Vedanta Resources Ltd. to buy the public shareholding of Vedanta Ltd. at ₹87.25 per share.
Vedanta Ltd. shares dropped 2.7% to ₹89.95 on the BSE on Tuesday. The firm appointed Upendra C. Shukla, a practising company secretary, as the scrutiniser in terms of the Companies Act to conduct the process of the postal ballot.
According to proxy advisory firm Institutional Investor Advisory Services (IiAS), the delisting floor price at ₹87.25 per share is ‘unfair’ and shareholders ‘should have ideally got a base price of ₹225 per share’. However, the final offer price for the delisting proposal will be determined in the reverse book-building process.
The proposal will now be put to a shareholder vote and needs to be approved by at least 66.7% of the minority shareholders.
“The transaction is credit-positive and is a major step in the simplification of Vedanta Resources’ complex group structure of less than 100% ownership in operating subsidiaries, which has historically been a drag on its credit profile,” Moody’s Investor Service said in a report.
If successful, the transaction will provide Vedanta better access to future cash surpluses and cash of about $1.4 billion held by Vedanta Ltd. and its wholly owned subsidiary, Cairn India Holdings Ltd., as at December 2019, it added.
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