Financial Daily from THE HINDU group of publications
Thursday, May 16, 2002
Industry & Economy - Disinvestment
Maruti: Govt assured of Rs 1,424 cr mop-up from public issue
NEW DELHI, May 15
THE Union Government will receive a minimum additional amount of Rs 1,424 crore when it sells the existing shares in Maruti Udyog Ltd (MUL) through a public issue in two phases.
Suzuki Motor Corporation (SMC) has agreed to underwrite the public issue of Government's residual stake in Maruti at Rs 2,300 per share for around 36 lakh shares in the first round and Rs 2,000 per share for the balance of about 29 lakh shares in the second round.
"This would mean an additional amount of Rs 1,424 crore for the existing shares worth 45.54 per cent that the Government would hold in Maruti after the rights issue," Government sources said.
If the existing shares were to be sold at more than the present book value of about Rs 2,000 per share, the Government's receipts would go up further, they added.
"Thus, the Government will, at a minimum, get Rs 2,424 crore out of the transaction of handing over control to Suzuki and selling its existing shares (Rs 1,000 crore as control premium and Rs 1,424 crore as additional amount for existing shares)," the sources said.
This would be Rs 266 crore more than the fair value of Rs 2,158 crore for the Government's existing share of 65,80,181 shares at Rs 3,280 per share.
The fair value was determined on the basis of the valuation done by three independent valuers, the average of which worked out to Rs 3,280 per share.
After the first public issue, the Government's holding in Maruti is expected to come down to the level of 25 per cent.
The Government has incorporated a put option to sell this stake at a discount of 15 per cent and/or 10 per cent of the average market price.
The put option can be exercised any time before April 30, 2004 at the book value now (Rs 2,000 per share) or then, whichever was higher.
The Government will sell its existing shares in the domestic market with the participation of Indian and global investors through a book-building process. "If the investors agree to buy the shares at more than the price at which Suzuki has agreed to underwrite the shares, it would be sold to the highest bidder," the sources said.
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