Vedanta delisting: Management to meet to discuss next steps

With the failure of its delisting offer, Vedanta Resources founder Anil Agarwal and the management committee of Vedanta Limited are scheduled to meet on Monday to discuss the next course of action.

On Saturday, in a notice to the Bombay Stock Exchange, Vedanta said: “....the delisting offer is deemed to have failed in terms of Regulation 19(1) of the Delisting Regulations.”

BusinessLine had reported the failure of the offer soon after it closed at 7.30 pm on Friday. By 7.20 pm, the acquirer had managed to get only 125.47 crore shares against the requirement of 134 crore shares.

Meanwhile, sources told

BusinessLine that more than 12 crore shares that were tendered as part of the delisting offer are under the scanner for ‘suspected error entries’. Most of these “error entries” seem to have happened during the market hours, as in the extended deadline – during 3.30-7 pm – less than 1 crore shares were tendered, the sources said.

 

A ‘punching error’?

“The 12 crore shares that are being shown as unconfirmed bids are likely error entries. Large funds often punch their orders through multiple brokers. When so many shares are to be submitted, it is possible that some brokers could have made punching errors and then resubmitted their bids. Since there is no option in the stock exchange system to immediately delete the erroneous trades, they remained in the database and kept showing, leading to confusion. But these were genuine errors, the likes of which happen in everyday trading,” a source close to the offer managers said.

 

The source further said the stock exchanges will clarify, if asked, that there is no option to delete immediately on the last day of bidding.

There were rumours in the market that acquirer had received 137 crore shares as such a figure was displayed in the table that showed the bids at every price. But a huge number of shares were being displayed as unconfirmed. Depositories did not give their confirmation for more than 12 crore shares as they could not find a proper owner of these shares in their demat database, the source said.

Vedanta’s delisting offer was to close at 3.30 pm on Friday but the deadline was extended to 7 p.m. as it was believed that there was too much load on the systems and not all shareholder bids could be uploaded. While there were talks of tech glitch in the uploading process, regulatory officials say that bids were being continuously accepted and the uploading process was never stopped. Since bids were being received at varied prices for the delisting offer, the ‘display’ slowed down significantly.

Shares submitted

Data showed that bids were even received for up to ₹1 lakh per share. More than 24 lakh shares were submitted for delisting at ₹5,555 per share. Vedanta had set a floor price for the delisting offer at ₹87.25, for which it was severely criticised by market experts and analysts. Their view was that promoters were grossly undervaluing Vedanta.

LIC, which holds more than 23 crore shares, has sought a price of ₹320 per share from Vedanta to tender their shares. Vedanta will have to return all the shares accepted in the offer in the next 2-3 business days as the delisting has failed. The company will also have to start the process of passing ₹12 per share dividend to shareholders that it had received from Hindustan Zinc. Vedanta is a large shareholder of Hindustan Zinc, which has huge cash reserves.