The Hindu Business Line : Essar Shipping delisting move runs aground

Company needed minimum of 7.18 cr shares from shareholders
Public shareholding in the company is about 24%
It could get only 6.09 cr shares

Mumbai March 20 Essar Shipping's attempts to delist its shares from the Bombay Stock Exchange have come a cropper, with the company not being able to garner the minimum number of shares needed to be tendered by public shareholders.

The company needed to mop up a minimum of 7.18 crore shares from its shareholders to meet the mandatory 90 per cent shareholding required for delisting. But at the end of the Reverse Book Building (RBB) process, it could get only 6.09 crore shares, which fell short of the minimum delisting requirement by about 15 per cent.

In the light of this development, the company will now continue to remain listed on the BSE. The public shareholding is about 24 per cent. The book- building process opened on March 5 and closed on March 16.

"As the aggregate number of shares tendered by the public shareholders was less than the number required to reduce the public shareholding of the target company (Essar Shipping) as per the provisions of the Listing Agreement, the delisting offer has failed in terms of the guidelines," the company said in a communication to the BSE on Tuesday.

The shares deposited in the Special Depository Account of the trading members during the book-building process will be returned to the respective public shareholders as per the guidelines, the company added.

In accordance with the delisting norms, a floor price for the equity shares to be acquired was fixed at Rs 31.62.

It was based on the average of the last 26-week high and low closing prices on the BSE.

As per the norms, the final offer price is determined at the price at which the maximum number of equity shares is offered (Discovered Price), pursuant to the reverse book building. A majority of the shareholders tendered their shares around Rs 50 per share, said a company official.

The closing price of the company's shares dipped from Rs 51.05 on March 1 to Rs 40.35 on March 20, a fall of 20.95 per cent.

Analysts feel that some shareholders may not have found the price attractive enough, while the older shareholders may have preferred to wait for the company to make its next move before tendering their shares.

Says Mr Lalit Thakkar, Director (Research) of Angel Broking: "Essar Shipping has investments in many unquoted equities. Perhaps, shareholders find it difficult to determine the company's actual valuation. They feel that there is more value in the group than the shipping business in isolation and hence their hesitation in tendering their shares."

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