Friday i.e. October 9 is the final day of the reverse book building process in which public shareholders can tender the shares of Vedanta as the company prepares to get delisted from Indian bourses. Vedanta chairman Anil Agarwal, in an interview with CNBC-TV18, said the company will go for a counteroffer for the buyback of shares "if need be". The floor price for tendering the shares has been set at Rs 87.25 by the company.

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Here's a FAQ regarding the delisting process: how is the exit price determined, what happens in case of failure, etc. Let's take a look

What is the background to the Delisting Offer?

Vedanta expressed its intention to acquire the shares and consequently voluntarily delist the from the Stock Exchanges in accordance with the Delisting Regulations and if such delisting is successful, then to also delist the American depositary share (ADS) from New York Stock Exchange (NYSE) and deregister the Company from the Securities and Exchange Commission (SEC), subject to the requirements of the NYSE and the SEC.

What are the Important Dates?

The board provided its consent to the Delisting Offer on May 18, 2020.

and it was approved by the shareholders by way of a special resolution on

June 24, 2020. Post shareholders' approval, the Company received in-principle approvals from the Stock Exchanges (BSE and NSE) on September 28, 2020.

The bidding period is for 5 days, commencing from October 5, 2020, until October 9, 2020. During which the public shareholders may tender their bids.

The last date for the announcement of Discovered Price/ Exit Price and the Acquirers’ acceptance/ non-acceptance of Discovered Price/Exit Price is October 16 and the proposed date for payment to shareholders or return of shares in case of failure will be October 23.

How will the final exit price be determined?

The final exit offer price will be determined as the price at which Equity Shares accepted through eligible bids. All the quotes are aggregated and a final price, also known as the 'discovered/exit price' is announced on the last day of the book-building exercise.

The company board will have to accept/reject the discovered price within 5 working days from the closure of the book-building exercise.

What is the minimum number of shares required for delisting?

For the delisting process to be successful, the promoter's stake in the company will have to go up to 90 percent. If the promoter fails to increase his stake to 90 percent, the company cannot delist. In this case, a minimum of 134.1 crore shares is required to be tendered at Exit Price to achieve the 90 percent threshold. However, this figure may change due to the conversion of American depositary shares (ADS) into Equity Shares

When are the shares delisted from the Stock Exchanges?

The shares are delisted if the final offer exit price is accepted by the

Acquirers/ Public Shareholders. After the success of the Delisting Offer and payment of consideration to the shareholders who have tendered their shares, the company will make a final application to the exchanges. Upon the receipt of the approval of the stock exchanges, the shares will be delisted.

Are the Acquirers required to deposit any amount in an escrow account?

The Acquirers are required to deposit in the escrow account the total estimated amount of consideration calculated on the basis of the floor price and a number of Equity Shares outstanding with Public Shareholders. This can be done by way of a cash deposit or by a bank guarantee or a combination of both.

When will the shareholders receive money for tendering of shares?

Upon the success of the Delisting Offer, the Acquirers would be required to make a post-offer public announcement and informing its acceptance of the final exit price and the success of the Delisting Offer. All the Public Shareholders whose bids have been accepted and shares are verified to be genuine shall be paid the final exit price within 10 working days from the closure of the bidding period.

What will happen if the Delisting Offer fails?

If the exit price is not acceptable to the acquirers, they may either reject the offer or make a counteroffer to the shareholders. In the event, the counteroffer is also not accepted the delisting fails. In case of failure. the shares tendered by the shareholders during the reverse book building process shall be returned or released to them, within 10 working days from the end of the bidding period.

The escrow account opened by the Acquirers for the purposes of the delisting shall also be closed and the amount will be released. Also, the Company shall continue to be listed on the exchanges.

Is it mandatory for all shareholders to participate in the delisting offer?

It is not mandatory to participate in the delisting offer. In case the delisting is successful, the company will be delisted. If a public shareholder has not tendered its shares or if the shares have not been accepted because the price quoted by the shareholder was higher than the exit price, the shareholder has up to a period of minimum one year from the date of delisting to tender the shares at the exit price to the acquirers.

How will investors know if their bid has been registered?

Upon placing the Bid, the Seller Member shall provide a Transaction Registration Slip (“TRS”) generated by the exchange bidding system to the Public Shareholder. The TRS will contain the details of order submitted like Bid ID No., DP ID, Client ID, No. of the Equity Shares tendered and the price at which the Bid was placed, etc.

Can investors participate in the bookbuild process if they hold physical shares?

The shareholders who are holding physical shares will be required to approach their respective Seller Member along with the complete set of documents for verification procedures to be carried out. Upon placing the Bid, the Seller Member will provide a TRS generated by the Exchange Bidding System to the shareholder.

The Seller Member/Public Shareholder should ensure to deliver the documents as mentioned above along with the TRS either by registered post or courier or hand delivery to the Registrar to the offer within 2 days of the Bid Closing Date by the Seller Member. The envelope should be marked as “Vedanta Limited - Delisting Offer 2020”.

Public Shareholders holding the Equity Shares in physical form should note that the Equity Shares will not be accepted unless the complete set of documents is submitted. Acceptance of the Equity Shares by the Acquirers will be subject to verification of documents.

The Bids of the Public Shareholders whose original share certificate(s) and other documents along with the TRS are not received by the Registrar to the Offer, within two days after the Bid Closing Date, shall be liable to be rejected.

Can an investor revise/withdraw his submission after making a bid?

The shareholders, who have submitted the bids may withdraw or revise their Bids upwards not later than one day before the Bid Closing Date. A downward revision of the Bids is not permitted.

First Published:Oct 9, 2020 12:48 PM IST