The amalgamation scheme from Gujarat Gas only indicates the discounted cash flow method used for valuing GSPC Gas, GGCL, and GFSL and underlying asset approach method for valuing investment holding company GDNL, says Nomura
Gujarat Gas Co Ltd (GGCL) has released the composite scheme of amalgamation and arrangement for amalgamation of the company with GSPC Gas, Gujarat Gas Financial Services (GFSL), Gujarat Gas Trading Company (GTCL) and GSPC Distribution Networks (GDNL).
According to a research note by Nomura, the scheme provides clarity on swap ratio and final shareholding. However, the scheme does not provide finer details on valuations. It only indicates that the DCF (discounted cash flow) method has been used for valuing GSPC Gas, GGCL, and GFSL and “underlying asset” approach method has been used for valuing investment holding company GDNL.
Independent valuers had recommended the SWAP ratio for amalgamation of GSPC Gas and GGAS (and subsidiaries) with GDNL: 81 equity shares of GDNL for every 2 shares in GSPC Gas; 38 equity shares of GDNL for each share of GGCL; and 38 equity shares of GDNL for each share of GFSL. These swap ratios meant fresh issue of 4,732 million shares to shareholders of transferor companies (GGCL, GSPC Gas and GFSL). GDNL already had 900 million shares (400 million GSPC Gas, 350 million GSPL and 150 million GSFC). Even after extinguishing 400 million shares of GSPC Gas, the total issued capital base of GDNL could have increased to 5,232 million shares.
The final share-holding and swap ratio would be as follows:
(a) Existing share capital of GDNL will reduce to 13.2mn shares from 500mn shares (excl GSPC Gas’s 400mn shares which will be extinguished).
(b) For each share of GGCL, minorities will get 1 new GDNL share.
(c) For every 76 shares of GSPC Gas, 81 new shares of GDNL.
(d) For each share of GFSL, minorities will get 1 new GDNL share.
(e) GGCL’s 69.88% holding in GFSL and 100% holding in GTCL shall get extinguished.
(f) Total new GDNL 124.5 million share issue to the shareholders of transferor companies.
(g) Post amalgamation GDNL will have share capital base of 137.7 million shares (13.2 million existing plus 124.5 million new issuance).
(h) Post amalgamation, GSPC would be the largest shareholder (28.4%) in GDNL followed by GSPL (25.8%). Thus total promoter shareholding would be 54.2%.
Post amalgamation, the name of the new combined entity is proposed to be GSPC Gas.
The pie charts for current shareholding pattern and proposed shareholding pattern are given below:
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