After a failed delisting and buying shares in bulk deals, Anil Agarwal-led Vedanta Resources Plc has launched a voluntary open offer to acquire up to 10 percent stake in flagship Indian firm Vedanta Ltd. The parent has offered to buy up to 37.17 crore shares from public shareholders of Vedanta at Rs 160 apiece, according to an exchange filing. If successful, that will cost Rs 5,948 crore. The price announced on Sunday is a 12 percent discount to Friday’s closing of Rs 182.05.

Vedanta shares were nearly 3 percent down on Monday and were trading around Rs 179 at 15.00 Hrs. In October last year, Vedanta Resources had failed to garner the required number of shares to delist its Indian arm at the offer price of Rs 87.5 apiece.

Last month, promoters had increased their stake from 50.14 percent to 55.04 percent through block deals totalling Rs 2,959 crore. As per Sebi’s takeover code, promoters holding more than 25 percent but less than 75 percent shares can buy up to 5 percent through creeping acquisition in one financial year.

Any acquisition of shares beyond 5 percent may trigger an open offer. The promoters can after a one-year cooling-off period, can take another shot at delisting that will simplify the group’s complex shareholding structure and allow it better access to consolidated cash while avoiding leakage during dividend distributions.

”The Acquirer (Vedanta Resources) together with PACs is making a voluntary open offer for the acquisition of up to 37,17,50,500 equity shares, representing 10 per cent of the fully diluted voting share capital of the target company (Vedanta Ltd),” the filing said. At the time of raising its stake last month, Vedanta Resources had said the move was aimed at simplifying the group structure.

”This is in line with our stated strategic priority for simplifying the group structure to align the group’s capital and operational structures, streamline the process of servicing the Group’s financing obligations and improve a range of important credit metrics,” it had said. The simplification process – which has been underway for several years – has involved mergers of group companies and may involve other share acquisitions in accordance with applicable law, the company had said.

Moody’s Investors Service had in October stated that Vedanta Resources Ltd’s (VRL) failed attempt to take full ownership of its profitable operating subsidiary Vedanta Ltd will weaken liquidity. ”Without operations of its own, VRL as the holding company needs to refinance debt maturities at a time of tight capital market liquidity, putting undue pressure on key subsidiaries to upstream cash,” it had said on October 27, 2020.

The takeover would have significantly improved the holding company VRL’s cash flow and liquidity. Around USD 7.5 billion of debt — or 50 per cent of the group’s total consolidated reported debt of USD 15.5 billion, including debt at Volcan Investments — is coming due for repayment in the two fiscal years through March 2022.

During the delisting offer in October, promoters were able to get only 125.47 crore confirmed bids against the required 134.12 crore shares. Vedanta had tied up USD 3.15 billion in loans to finance the buying of shares but returned the money to lenders no sooner had the delisting bid failed.

As of September 30, LIC held 5.58 percent of Vedanta Ltd while ICICI Prudential Mutual Fund and HDFC Mutual Fund owned 4.36 per cent and 2.79 percent stake, respectively. Societe Generale also holds a 2.33 per cent shares in the company.

First Published:Jan 11, 2021 3:29 PM IST