The Rs 9,000-crore buyback offer from Larsen & Toubro has been junked by the market regulator. In a letter to the company on January 18, SEBI said: "Since the ratio of the aggregate of secured and unsecured debts owed by the company after buy-back (assuming full acceptance) would be more than twice the paid-up capital and free reserves of the company based on consolidated financial statements of the company, the buyback offer is not in compliance with Section 68(2)(d) of Companies Act, 2013 and Regulation 4(ii) of SEBI (Buy-back of Securities) Regulations, 2018. You are, therefore, advised not to proceed with this buy back offer". L&T made this disclosure to the exchanges on Saturday.
The company had proposed a buyback of up to 6.10 crore shares from its equity shareholders as on the record date (October 15, 2018) on a proportionate basis by way of the tender offer route at Rs 1,475 a share, considering the debt-equity ratio requirement on the basis of standalone financial statements, post buyback.
Pursuant to the approval of the buyback by the shareholders of the company, a draft letter of offer was submitted to SEBI for its comments, it said. However, SEBI has now rejected the proposal and asked the company to junk it.
The buyback was also available to global depository shareholders if they converted the depositories to equity shares by the same date, L&T had then said.
Among the major shareholders include: 57 mutual funds - 14.87 per cent; 819 foreign portfolio investors - 18.93 per cent; 57 financial institutions - 1.94 per cent; 9.66 lakh small investors - 19.67 per cent; and 58 high net worth individuals - 2.18 per cent.
The government also holds 1.8 per cent stake in the company through Specified Undertaking of the Unit Trust of India.
Shares of L&T closed at Rs 1,318.25 on the BSE on Friday. Its 52-week high and low are Rs 1,469.60 and Rs 1,183.40 respectively.