Promoters of Essar Ports Ltd have fixed Rs.93.66 as the floor price per share for acquiring 10.72 crore equity shares from public shareholders.
At this floor price, promoters will have to shell out Rs.1,004 crore to buy out 25.06% in share capital from the public as a part of the delisting exercise, the company said in a filing to stock exchanges on Tuesday.
The promoter group, including Essar Shipping and Logistics Ltd, Essar Ports and Shipping Ltd (formerly Essar Port Holdings Mauritius Ltd), Essar Projects (India) Ltd, Essar Steel India Ltd and Essar Global Fund Ltd (formerly Essar Global Ltd), collectively holds 74.94% of the total share capital of Essar Ports.
Essar Ports said the proposed delisting of equity shares from the stock exchanges is to achieve complete operational and financial flexibility in furtherance of the company’s businesses and financial needs and to enable the promoter group to pursue strategic opportunities in respect of its investments.
“The promoter group believes that the delisting of the company’s equity shares will be in the interest of the public shareholders as it will provide them with an exit opportunity from the company in an open and transparent manner at a price calculated by the reverse book-building mechanism set out in the delisting regulations,” the company said.
A reverse book-building process is a mechanism of delisting under which shareholders tender their shares at their prices of preference. Thereafter, based on the preference of the majority of the shareholders, a delisting price is fixed. But the delisting price cannot go below a floor price already fixed by the company.
The bid offer will open on 30 October and close on 5 November.
On 12 October 2014, the Essar Group board approved delisting of subsidiaries Essar Shipping and Essar Ports from the bourses, citing lack of investor appetite and the promoter group’s need for increased flexibility.
The promoters had set the floor price for delisting shares of Essar Ports at Rs.90.50 apiece in October 2014.
“The resolution for delisting is the same. Securities and Exchange Board of India has suggested some modifications to the calculation of pricing for delisting. Hence, we have revised upwards,” a senior executive at Essar Ports said.
He did not comment about the prospects of the successful delisting.
The shares of Essar Ports lost 0.95% to close at Rs.115.10 per share on Tuesday on the BSE, while the benchmark index, Sensex, lost 0.4% to close at 27,253.44 points.
Essar Ports is engaged in the business of developing and operating ports and terminals and is one of the largest private sector port companies in India by capacity and cargo traffic.
Essar Ports has an existing aggregate capacity of 104 million tonnes per annum (mtpa) across two facilities located at Vadinar (58 mtpa) and Hazira (30 mtpa) in Gujarat.
The company is in the process of increasing its aggregate ports capacity to 194 mtpa with expansion of the Hazira facility from 30 mtpa at present to 50 mtpa; the addition of a new 20 mtpa dry bulk terminal at Salaya in Gujarat; an 18 mtpa coal import terminal at Paradip in Odisha and a 32 mtpa iron ore export terminal consisting of three berths at Visakhapatnam in Andhra Pradesh.