NEW DELHI, July 7: Market regulator Sebi has indicated that it is okay with Tamil Nadu government’s proposal to buy Centre’s 5 per cent stake in Neyveli Lignite Corp (NLC) provided the acquisition is done by a qualified state entity.
Sebi has written back to disinvestment department last week saying that the 5 per cent stake sale should be done to the state PSUs through the Institutional Placement Programme (IPP) route. Also, the acquirer has to be registered with SEBI as a Qualified Institutional Buyer (QIB).
“Sebi is willing to consider the proposal of the Government of Tamil Nadu to offer 5 per cent of Government of India equity in NLC to state PSUs,” an official source said.
Tamil Nadu Chief Minister J Jayalalithaa had written to Prime Minister Manmohan Singh last month saying that the state would buy the 5 per cent of Centre’s equity that is being divested. The letter was sent to Sebi for their comments.
Sebi has now asked the Tamil Nadu government to send a concrete proposal and the list of state PSUs which could buy shares in NLC.
“The state PSUs will have to be registered with Sebi as QIBs to be eligible to buy shares in NLC through the IPP route,” the official added.
The Centre currently holds 93.56 per cent stake in NLC. The stake sale is done to meet the minimum public holding norm.
SEBI has set a deadline of August 8, 2013, for all listed central public sector units to have a minimum 10 per cent public shareholding.
The Cabinet had last month cleared sale of 7.8 crore shares, or 5 per cent of government’s stake, through an offer for sale in NLC to raise around Rs 455 crore at current prices.
Shares of NLC on Friday closed at Rs 58.30 on the BSE.
Finance Minister P Chidambaram had last week said the Centre will consider Tamil Nadu government’s offer to buy 5 per cent stake in the proposed disinvestment of NLC and sought to assuage employees’ concerns, saying there will be no change in management or staff policies.
The Tamil-Nadu headquartered firm is facing stiff protests over the disinvestment decision and 30,000 workers went on an indefinite strike since July 3 to protest the disinvestment.
Output of the lignite producer has been hit due to the ongoing strike.
To meet the minimum public holding norm, Sebi has allowed companies to take either one of the routes: FPO (follow-on public offer), offer for Sale (OFS), Institutional Placement of Shares (IPP) or bonus/rights issues. A company wanting to take any other route must take Sebi’s permission before doing so. (PTI)
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