Today was the last trading day of Electrosteel Steels Limited and the company will be delisted from the exchanges from 13/12/2018.
Why the company delisting?
ESL was a debt laden company which owed over Rs.13000 crores. The creditors of the company led by SBI had initiated insolvency proceedings against the company in the National Company Law Tribunal (NCLT). Once a case is filed in NCLT and if there is enough evidence of the company’s default, the company is admitted into a corporate insolvency resolution process (“CIRP”) by the tribunal. Once admitted, a resolution plan must be submitted within 180 days with a possible extension of 90 days. Any party, related or otherwise can submit a resolution plan.
In the case of Electrosteel, Vedanta, Tata Steel, Renaissance Steel India and Edelweiss Alternative Asset Advisors submitted bids. Subsequently the resolution plan submitted by Vedanta was approved by the NCLT.
What happens to my shares?
As part of the resolution, there was a reduction and consolidation of the share capital of the company. The face value of the shares of the company was reduced from Rs.10 to Rs.0.20 and 50 equity shares of Rs.0.20 face value were consolidated into 1 fully paid up share of Rs.10 each.
Subsequently, the company announced that it would be buying back the shares from the public at a price of rs.9.54
The Acquirer has expressed its intention to acquire up to 1961,67,342 equity shares of the Company representing approximately 10% of the paid up share capital of the Company held by the shareholders of the Company (other than the Acquirer) at a price of INR 9.54 per equity shares
Once the stock is delisted, the company will offer an exit mechanism in which it will buyback the shares from the shareholders. The buyback window will be open for a period of 365 days. So, you can either choose to:
- Sell your shares to the company at a price of Rs,9.54
- Continue to hold the shares of the company post the close of the buyback period. In this case you won’t have an exit route unless (i) the company lists again or (ii) someone is willing to buy these unlisted shares from you.