The much-debated sale of the small 3.56 per cent stake in Neyveli Lignite Corporation that will fetch the Centre over Rs.350 crore, besides helping the Navaratna public sector undertaking comply with the minimum public shareholding norms, will happen on Friday.
The price band of the one-day offer will be Rs.58-60 per share. As per the proposal, the Centre will offload 5.97 crore shares of Rs. 10 face value, representing 3.56 per cent equity shares of NLC, to the State government in a single tranche.
According to State government sources, five public sector undertakings of Tamil Nadu will bid at the highest rate to ensure that no one else gets the stake. In the event of another entity making the same bid, preference will be for these PSUs.
At this price band, the expenditure for Tamil Nadu government will be between Rs.346.26 crore and Rs.358.20 crore. The shares are expected to be allotted in a dematerialised form by August 8.
Soon after the Centre announced plans to divest five per cent stake in NLC to increase the public shareholding in the company to the 10 per cent norm, Chief Minister Jayalalithaa, while opposing the move, sought special exemption for NLC. Subsequently, she suggested that the Centre consider selling the stake to the State government. This way, the Centre could ensure against the shares being acquired by private entities and address the concerns of trade unions.
She had said though it would cost Rs.500 crore, the State government was keen on acquiring the five per cent stake to be shed. After the Centre agreed to her proposal, Ms.Jayalalithaa pointed that it would be enough if 3.56 per cent was divested, as the public shareholding in NLC was already 6.44 per cent.
The Centre agreed to this suggestion too and sought certain relaxations from the Securities and Exchange Board of India for the deal, including preference for the five qualified institutional buyers from Tamil Nadu in the Institutional Placement Programme.
In the documents filed with SEBI, the central public sector enterprise had stated that as this issue was an offer for sale of equity shares by the Centre, the issue proceeds were to be remitted to the selling shareholder. On Thursday, the NLC scrip closed at Rs. 55.70 on the Bombay Stock Exchange.