28th
June 2020
OPEN LETTER TO SHRI ANIL AGARWAL CHAIRMAN
VEDANTA GROUP
Shri Anil Agarwal
ji,
I write this
Open Letter to you because I know about you but do not know you. For diverse reasons, you and I both want the
delisting offer of VEDANTA to succeed. I want the delisting offer to succeed
because I believe it is in the interest of small shareholders. Delisting offer
gives an exit opportunity at a
reasonable price. If the delisting offer fails, the prices will crash and will
lead to heavy losses to the small shareholders. You, of course, must have
different reasons and larger plans.
Hope you are
concerned that 86% of the persons responding
(not in terms of shareholding)
voted against the delisting. Although
the condition for minimum 25% participation by public shareholders has been
diluted, yet a decent number of shareholders should participate. You have 7.8
lakhs shareholders but only 15,903 number of responses were received. 13,756
voted against the Delisting proposal. In other words only 2147 people out of
7.8 lakhs supported you. This gives a dismal 0.28%!!!
What was more
surprising to me was that 14.7% institutional votes were cast against
delisting. Unlike small investors who think emotionally, institutions are
supposed to take a more rational and reasoned decision and prepare a proper
file note on the justification of their decision. What could have been their
justification for voting against it?
The offer price
of Rs.87.50 is the culprit and must be revised immediately. I am sure none of
your advisors are telling you, that you will be able to get delisted @ 87.50.
You are definitely prepared to pay more. But the investors are not aware. My
suggestion to you is to declare an increased Indicative price, say 125 or more,
although you are actually prepared to go much higher. If for any reason, you
are not in a position to do that because of requirement of increased Escrow
deposit, you can at least, make some press statement or a TV interview saying
that you will not be averse to accepting higher Exit price, beyond 87.50, may be 125,
since the market price is much higher.
Anil ji, I am
veteran in the share market and focused mainly on Takeovers, Buy-backs and De-listing
for more than 2 decades. Almost all such cases are keenly watched by me. Perhaps,
you are not aware that the seed of
Counter offer provisions in the delisting offer was sown by me (SEBI never
acknowledges such efforts). Copy of my letter dated 30 May 2014 in response to
the discussion paper issued by SEBI,can be viewed on my blog-- http://sebi-takeover-watchman.blogspot.com/. The two main reasons for failure of Delisting
offer are:
ü
Sufficient number of shares required to cross
the threshold have not been tendered.
ü
The Discovered price and the price at which the
required number of shares can be acquired, is very high and unacceptable to the
promoter/acquirer.
In the second
situation, you will get an opportunity to give a counter offer but that
opportunity will be available to you if and only if, the first situation is
satisfied, i.e. sufficient number of shares required to be acquired have been
received in the offer. It is utmost important for the success of the offer to
bring on board the maximum number of shareholders. Let them quote whatever
price they want. If the 90% threshold is not crossed, you will not get a chance
of making a counter offer.
In the past such
issues, promoters/merchant bankers etc. would invariably contact us, but no one
contacted me till now. No one has tried to explain to me or motivate me to vote
in the Postal ballot or participate in the delisting offer. This leaves a feeling that either you are
overconfident or indifferent.
Your
advisors/team need to talk to every single investor at least those holding over a thousand shares.
Any complacency on their part will lead to your not being able to reach
the threshold of 90%. They must bring on
board, a large number of shareholders. In conclusion 2 things must be done
immediately:
A.
Make investors aware that Rs.87.50 is just the
indicative price. Final price may be higher. For the purpose you may revise the
indicative price higher or make press statement etc. and
B.
Every single investor, at least those
holding over a thousand shares must be contacted.
If the above is
not done the probability of you not reaching the magic number of 90% is very
high and your whole plan of delisting and beyond, will collapse. Market
sentiments are clearly indicating that..
Yours truly,
A Small Investor
of Vedanta
Arun ji, thx for sharing your thoughts. But some 50% is held by Vedanta global and 35% by institutions. They just need 5% more which is not large and Vedanta may have contacted largest shareholders amongst retail besides institutions. I am not sure if we can draw the inference in the blog because some of us holding 1000+ shares have not been contacted. In case of Vedanta, 1000 shares are just valued at 1.2 lacs, not a large value and there will be thousands of us which makes it difficult for a company to discuss as shareholder level. I may be wrong but this is something that comes to my mind
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ReplyDeleteI agree with you Sourabh ji, but the thrust of the article is to take care of the Public sentiment in terms of number of Folios, not only in terms of number of shares held, it is so much against AA. Also give some assurance/indication to the public at large that this is a serious exercise and the management is aware that the delisting cannot happen at 87.50
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