Shares of Hindustan Zinc continued their downslide, shedding around 21 percent in four days since promoter Vedanta announced offloading stake in the company through an offer-for-sale.
At 10.06 am, shares of Hindustan Zinc were trading nearly 5 percent lower at Rs 494.70 on the NSE, which is close to the Offer For Sale floor price of Rs 486. The Offer For Sale is open for retail investors to subscribe on August 19, as per schedule.
Anil Agarwal-led Vedanta is divesting a 3.17 percent stake in Hindustan Zinc through an offer-for-sale (OFS) running from August 16-19. The offer included a base sale of 1.22 percent, with the option to sell an additional 1.95 percent if the offer is oversubscribed. The total 3.17 percent stake is being offered at a floor price of Rs 486 per share, initially at a discount to Hindustan Zinc's closing price on August 13. This takes the value of the OFS to around Rs 6,000 crore.
Vedanta also announced on August 16 that it will exercise the oversubscription option in the offer to the extent of over 1.21 crore equity shares, representing 0.29 percent of the total issued and paid-up equity share capital of the company.
"This will be in addition to over 5.14 crore equity shares, representing 1.22 percent of the total issued and paid-up equity share capital of the company forming part of the base offer size," Vedanta said.
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As of the end of the June quarter, Vedanta Ltd. held a 64.92 percent stake in Hindustan Zinc while the government owned 29.54 percent.
Vedanta's stake sale follows a Bloomberg report stating the company's efforts to raise $2.5 billion to manage its significant debt burden. The report also mentioned that Vedanta recently halted plans to sell its steel business after securing Rs 8,500 crore through a Qualified Institutional Placement (QIP) of shares. In July, Moneycontrol reported that the proceeds from the QIP are intended to repay debts owed to Oaktree Capital, Deutsche Bank, and Union Bank of India.
As of the end of the June quarter, Hindustan Zinc reported a debt of Rs 11,178 crore, bringing Vedanta Group's consolidated debt to Rs 78,016 crore. In May, Hindustan Zinc announced plans to spend Rs 4,225 crore in interim dividends, a move designed to assist the parent company, Vedanta, in its efforts to reduce debt.
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