The answer is a resounding YES. As I mentioned in my previous Blog/tweet, once he gets on the conveyor belt, there is no STOP button, but as of now, he can take as much as one full year before stepping on the belt.
What makes me believe that he will pull the trigger any day now ? Consider the following:
a) A month or so ago, Hindustan zinc (HZL) obtained Crisil rating for Rs 19,000 Crore borrowings of HZL, incl 7500 Cr of CPs and 8500 Cr of NCDs. Wait a minute, did you say NCDs ? Why would a company that generates something like 5000 Cr free cash flow after all capexes need NCDs for ? No prizes for guessing.
b) There are rumours in banking circle that beauty parades are being organised in Vedanta House in Mumbai for issuing of debentures and Rs. 7500 Cr of CPs are already largely placed.
c) A promoter company, Vedanta Holdings Mauritius II Limited obtained Moody’s rating B3 earlier this week for raising unsecured money. Might be it is concluded by now.
d) Twin star, one of the promoter companies has informed the stock
exchange just yesterday of some conversion of ADRs.
All these point out to the fact that AA will jump on to the conveyor belt any day now.
The next question is, how much he needs and how much he has ? I am assuming HZL will not give dividend till delisting of Vedanta Ltd is complete, as he never wants to share anything with minority investors if he can avoid it, sp no HZL dividend till delisting. Here is the maths:
(1) REQUIREMENT: 371.7 Cr shares outstanding x 40% (they already have 50%, need to reach 90%) x 150 (assumed for delisting) = $ 2.97 Bn min required (can go upto $ 3.7 Bn if 100% people opt in for delisting, but in reality even 90% is touch and go)
(2) SOURCES: $1.75 Bn already tied up, $ 0.50 Bn bridge loan finalised, $ 1.5 Bn unsecured loan under finalisation today in London (refer c above) = $ 3.75 Bn
(3) What if there is a shortfall in 2 above ? That is where HZL comes in. According to a 2019 amendment in the Companies Act, a Company can give loan of upto 60% of its net worth to a related party without Shareholder approval. AND HZL is ready with funds or will be on two days’ notice (refer a above). On top, it has 22,000 Cr cash anyways; incidentally 60% net worth comes to app 25,000 Cr)
NET NET, Vedanta UK, is likely to climb the conveyor belt of delisting, next
week and the delisting process will be completed next month.
Likely
timeline
|
Acivtity No. |
Stipulated time |
Assumed Action Date |
Event |
|
A |
One Year |
17-Aug-20 |
In-Principle Delisting approval to be applied to Stock exchange. It
seems that the application for "in-principal" approval has not been
made as yet. Whenever the application is made add the no. of days to 26th
June 2020, to arrive at the approximate number of days for each activity |
|
B |
A+5 |
22-Aug-20 |
SE in-principle approval to be obtained. SE has to respond within 5
days, Reg 8(3) |
|
C |
B+1 |
23-Aug-20 |
Public Announcement (PA) & Escrow deposit , to be made
within one day of receipt of 'In-Principal' approval, Reg.10(1) |
|
D |
C+2 |
25-Aug-20 |
LOO to be dispatched within 2 days of PA , Reg.12(1) |
|
E |
C+7 |
30-Aug-20 |
RBB to start within 7 days of PA Reg. 13(1) |
|
F |
E+5 |
4-Sep-20 |
RBB to be open for 5 days Reg. 13(2) |
|
G |
E+6 |
5-Sep-20 |
RBB to close |
|
H |
G+5 |
10-Sep-20 |
Discovered price to be announced within 5 days of closure of RBB.
Reg.18 |
|
I |
G+10 |
14-Sep-20 |
payment to be made within 10 days of the closure. Reg.20(2) |
|
J |
H+2 |
12-Sep-20 |
Fresh PA for Counter offer and
dispatch of LOO within 2 days of announcement of discovered price. Reg 16(1A) |
|
L |
J+7 |
19-Sep-20 |
Opening of Counter offer bidding process within 7 days of PA |
|
M |
L+5 |
24-Sep-20 |
Counter offer bidding closes, open for 5 days |
|
N |
M+5 |
29-Sep-20 |
Success/ failure of counter offer to be announced Reg.18 /19 within 5 days of closure |
|
O |
M+10 |
4-Oct-20 |
Payment/Refund of shares |
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