Hindustan Zinc tanks 8% as OFS offering 3.2% stake at discounted price opens

According to Hindustan Zinc's latest shareholding data, the government holds a 29.54 percent stake, while Vedanta owns 64.92 percent of the company.

Shares of Hindustan Zinc tanked nearly 8 percent in opening trade on August 16 as the offer-for-sale, through which promoter Vedanta Ltd will divest a 3.17 percent stake in the company, opened for subscription.

The OFS, active from August 16-19, will feature a base offer of 1.22 percent, with an option to sell an additional 1.95 percent if oversubscribed. A total 3.17 percent stake will be offered at a floor price of Rs 486 per share, implying a 15 percent discount from Hindustan Zinc's previous closing price.

At 09.25 am, shares of Hindustan Zinc were trading at Rs 534.75 on the NSE, while those of Vedanta were up nearly 2 percent at Rs 427.40.

The issue will open for non-retail investors on August 16 and for retail investors on August 19. The stake offered by Vedanta was updated after the company initially proposed to offload 2.6 percent equity on August 13.

According to Hindustan Zinc's latest shareholding data, the government holds a 29.54 percent stake, while Vedanta owns 64.92 percent of the company.

The news of Vedanta's stake sale comes after a Bloomberg report revealed the company's plans to raise $2.5 billion to help manage its substantial debt. According to the report, the company recently paused its plans to sell its steel business after raising Rs 8,500 crore through a Qualified Institutional Placement (QIP) of shares.

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In July, Moneycontrol reported that Anil Agarwal-led Vedanta aims to use the QIP proceeds to repay its debts to Oaktree Capital, Deutsche Bank, and Union Bank of India.

Hindustan Zinc reported a debt of Rs 11,178 crore as of the end of the June quarter, taking Vedanta Group's consolidated debt to Rs 78,016 crore. Back in May, Hindustan Zinc also announced plans to pay Rs 4,225 crore in interim dividends, a move intended to support the parent company, Vedanta, in its deleveraging efforts.

Along the same lines, a report from PTI, citing sources also stated that Hindustan Zinc is planning to issue a special dividend payout of Rs 8,000 crore to its shareholders for the current fiscal year. A board meeting is scheduled for August 20 to finalise the approval of this special dividend.

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