Vedanta Ltd.’s controversial
delisting process, which had angered its investors, has failed as per data available on the BSE (Bombay Stock Exchange) website. The metals major, led by billionaire Anil Agarwal closed a five-day reverse book building (RBB) process yesterday evening.
Vedanta promoters required 134.1 crore shares to successfully delist from the exchanges. As per the demand schedule released by the BSE at 7.30 pm yesterday evening, there were only 125.47 crore shares tendered as confirmed bids. The BSE data showed that about 12.32 crore shares tendered are yet to be confirmed.
There was a sudden twist in the delisting story on Friday evening. Earlier in the afternoon, Vedanta appeared to have successfully completed the delisting process based on bids received till late afternoon. In fact public shareholders had tendered 137.1 crore of the total 169.73 crore shares held by them but some bids were pending confirmation from bankers and custodians.
However bankers and the custodians were unable to provide final confirmation of the bids received for 12.31 crore shares. The RBB was to end at 3.30 pm yesterday but due to glitches earlier in the day (due to which some shareholders allegedly faced trouble in tendering shares), the BSE extended the bidding till 7 p.m.
News reports suggest that two large mutual funds have tendered their shares at Rs 153 and Rs 160 per share respectively. LIC (Life insurance Corporation), which holds a 6.37% stake in Vedanta Ltd, tendered all its shares at a price of Rs 320, a 267% premium over the floor price of Rs 87.50, thus hiking the cost of the delisting considerably.
Bankers (DAM Capital and JP Morgan) to the delisting offer have requested market regulator SEBI (Securities and Exchange Board of India) for a one-day extension, claiming that glitches in the BSE tendering webpage upset public participation. It is not yet known if SEBI will allow that extension and it remains to be seen whether such an extension will be adequate for the delisting process to achieve the necessary 90% threshold.
Provided they find success in the first leg of the transaction (by crossing this mandatory 90% threshold), promoters can make a counter offer on 13th October at any price above book value if the discovered price is not acceptable to them. The final outcome of the success or failure of the delisting would be known on 16th October. If delisting is successful, promoters will have to pay within 10 days to minority shareholders who have tendered their shares. The remaining shareholders will have up to one year to tender their shares at the exit price.
It looks likely that even if they cross the first hurdle (90% threshold), the counter offer they will need to make is going to be considerably higher. It is possible that the LIC bid price would then most likely be the discovered price for the delisting process. If Vedanta accepts the price, it has to offer all shareholders Rs 320/ share.