Vedanta Delisting Process: Step by Step Guide

3 min read
Vedanta Delisting Process: Step by Step Guide

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As we already know that shares of VEDANTA LTD. will be de-listed from the bourses as the company has received in-principle approval from BSE and NSE. As per guidelines, It is mandatory for VEDANTA promoters to hold at least 90% stake to delist and public shareholding in Vedanta is currently at 49.49% or 183.98 crore shares.

Let's talk about:

1) Important Dates
2) Bid Price
3) How to bid

Important Dates

Bid Opening Date: October 05, 2020
Bid Closing Date: October 09, 2020
Date for Announcement of Discovered Price & Acquirers’ Acceptance/Non-Acceptance of Discovered Price: October 16, 2020
Proposed Date for Payment to Public Shareholders and/or Return of Equity Shares in case of Bids not being Accepted or Failure of the Delisting Offer: October 23, 2020

Bid Price:

First of all, Indicative floor price of Rs 87.5 per share has nothing to do with delisting price. Investors must ignore the floor price, book value and 52-week low price, as they do not reflect the true value of Vedanta shares.

Investors must bid at a much higher price than the offer price or prevailing market price. The bid price should be the range of Rs 236-310. Vedanta’s stake in Hindustan Zinc alone is valued at Rs 145. Vedanta held 64.92% in the company as of June 30.

Stakeholders Empowerment Services (SES) has come out with a detailed report which recommends a 129%-186% premium to the indicative offer (87.5 Rs) price set by Vedanta Ltd to buy back shares for delisting from stock exchanges thus pegging Vedanta’s fair delisting price at Rs236-Rs310 per share.

Investors must not shy bidding higher price for delisting process because as per SEBI Delisting Regulations guarantees, the acquirer (VEDL) must offer to buy shares from all remaining shareholders at discovered price in case delisting offer is successful. Therefore, do not under bid for ‘Fear of Missing out’

After the bids are collected, they are arranged in lowest to highest order. As soon as the total bids touch 90% of share capital in that order, that bid price becomes the price that the acquirer needs to pay if he wants to delist the company.

Note: If you fail to bid or your bid isn’t accepted you will have time until one year from date of delisting to tender your shares, the promoters will buy back the shares from you at the final Exit offer price.

Basis the outstanding public shareholding, if Vedanta Resources utilises the entire amount of $3.15 billion, it can now pay a maximum delisting price of up to Rs 128 per share (PTI)

The Missing Dividend:

In May, Hindustan Zinc paid around Rs7,000 crore as dividend, of which, Rs 4,500 crore was received by Vedanta but as per dividend distribution policy (DDP) promoter did not even pass the dividend (Rs12.18 per share) of Hindustan Zinc (a subsidiary company) to shareholders.

So, the dividend payout of Rs 4,500 crore that Vedanta received from Hindustan Zinc in May is yet to be passed on to the company’s shareholders, even as its dividend distribution policy says normal dividend received from Hindustan Zinc shall be passed on to its shareholders in entirety. I don't know why anybody isn't talking about it.

How to bid?

You need to contact your broker in order to bid for VEDL desisting. It's a one click process like the way to apply for an IPO.

The promoter group will have to make an announcement regarding the success or failure of the delisting offer, along with the final exit price, within 5 working days from the closure of the bid period, i.e. on October 16, 2020.

If the delisting offer is successful, the promoter will pay the consideration to public shareholders within 10 working days of closure of the bidding period, which is October 23, 2020. If the delisting offer is successful, the payment will be made directly to your primary bank account. If you have pledged your shares, you will have to unpledge the shares to tender them in the delisting offer.

Continuing public shareholders shall have the right to vote and receive dividends (as and when declared).

If you have more confusion or questions about delisting process: check here

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Akshay Seth
Research Analyst (SEBI Regd.)
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