Government looks to raise Rs 6,000 crore from Coal India share buyback.

Industry:    2016-02-05

The government is looking to raise about Rs 6,000 crore by getting Coal IndiaBSE 0.28 % Ltd to buy back a fourth of its paid-up share capital at a premium but the state-owned company may only be able to comply with this by August, which means the Centre won’t be able to use this money to cover the shortfall from disinvestment proceeds for FY16. Following the buyback, the government’s stake down is likely to drop to 76% from 79.65%, said officials who didn’t want to be named. SBI Caps will advise on the buyback. Th buyback will be followed by an additional divestment that would lower the government’s stake below 75%. The Securities and Exchange Board of India (Sebi) has stipulated that the public should hold at 25% of state-owned listed companies by August 2017. The Centre is unlikely to go ahead with its plan of an additional 10% stake divestment in the company this fiscal because of stock market volatility. This would mean that, while it will get a dividend for FY16 from CIL, the government won’t get one in FY17 as the company will need to pay for the buyback, said an analyst who didn’t want to be named. As part of the buyback exercise, CIL has been asked to direct its wholly owned subsidiaries to buy back their shares from the parent. CIL has eight subsidiaries, all of which are now profitable. However, Eastern Coalfields and Bharat Coking Coal have just emerged from a recovery programme while consultancy and exploration arm Central Mine Planning & Design Institute is not financially strong. These three companies will likely be exempted from the plan, said the persons cited above. Mahanadi Coalfields, Northern Coalfields, South Eastern Coalfields will buy back 25% of their shares as per the plan. The percentage of stock to be bought back by Central Coalfields and Western Coalfields will depend on the money they have at the end of March, since they aren’t financially as robust. Since none of the subsidiaries are listed, th .. Read more at: http://economictimes.indiatimes.com/articleshow/50859221.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

print
Source: