Government prepared to purchase entire five per cent
A decision on the quantum of shares that will be divested in Neyveli Lignite Corporation (NLC), for complying with the minimum public shareholding norms, is yet to be made, official sources said on Tuesday.
Sources privy to the discussions in Mumbai on Monday among officials of the State government and those of the Centre and the Securities and Exchange Board of India (SEBI) said it was a decision that would be made by the Empowered Group of Ministers.
Whether the divestment is 3.56 per cent, as suggested by Chief Minister Jayalalithaa in view of the public shareholding in the ‘Navaratna’ public sector undertaking being 6.44 per cent, or five per cent, as announced earlier, is something for the Centre to decide. The Tamil Nadu government is, however, prepared to purchase the entire five per cent, the sources said.
On Monday, five State PSUs got the approval of SEBI for acquiring the stake to be divested in NLC. The Rs. 500 crore estimated to spend on the deal is for a five per cent stake. Apart from the State spending less, a decision on offloading only 3.56 per cent would go down well with the NLC workforce since it perceives the proposed divestment as privatisation. Irrespective of the decision, the State government is assured of the entire stake to be divested. Noting that the formula-based pricing – average of the two-week high and the two-week low of the scrip price – was comfortable, the sources said. This way it would have no problems during audit and the Centre would also not been seen as giving extraordinary concessions.
The relaxations that SEBI and the Centre will offer would be as per the rules. The institutional placement programme, the sources said, would be like a limited tender. While agreeing to relax the norm that a minimum of 10 bidders would participate in an IPP, the SEBI said the pricing should not be adverse to existing shareholders. Further, another norm – which says 25 per cent of the quantum offered should go to mutual funds – will also be relaxed to help the State PSUs bag the entire divested stake. The deal is expected to happen before the August 8 deadline.
Over the next two weeks, the Centre would come up with the offer document and appoint a merchant banker.
On the decision to select the five PSUs, the sources said, provident fund and pension funds were also eligible but since they were employee savings, the government decided on these firms.