INDIA: Binani Cement may succeed in bourse exit

Public shareholders tender 80% shares in delisting offer

Binani Cement, a part of the Braj Binani group, may succeed in delisting its shares from Indian bourses with public shareholders tendering nearly 80 per cent of their shares in response to a recent buyout offer, according to persons familiar with the matter.

Binani Industries, which owns 69.9 per cent stake in the cement maker, wanted to buy back the remaining shares from the public shareholders and de-list the company’s shares from the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

If the promoters accept all the shares tendered in the delisting offer at the discovered price, their shareholding in the company would surpass 90 per cent. This will legally allow them to delist the shares, according to Securities and Exchange Board of India (Sebi) regulations.

A delisting offer is deemed successful if post-offer, the shareholding of the promoter taken together with the shares accepted through eligible bids at the final price determined reaches the higher of 90 per cent or the aggregate percentage of pre-offer promoter shareholding and 50 per cent of the offer size.

Binani Cement’s delisting offer opened on February 7 and closed on February 11. The company will announce the exit price discovered through the reverse book-building route and the promoters’ acceptance of that price tomorrow.

In October 2010, Binani Cement’s board had decided to voluntarily delist its shares from Indian bourses, later approved by the company’s shareholders through a postal ballot.

According to Sebi guidelines, the exit price for voluntary delisting of shares is determined by the promoter of the company in accordance with the book-building process.

In delisting offers, a floor price is given to public shareholders, which is the average of the stock’s traded price preceding 26 weeks from the date of public announcement. There is no ceiling on the maximum price.

The final offer price is determined as the price at which the maximum number of shares have been offered. If the acquirer accepts the final price, he is required to accept all offers up to and including the final price but may not have to accept higher priced offers.

The floor price for Binani Cement’s delisting offer was Rs 82 a share. The company’s shares had closed at Rs 86.60, up 0.23 per cent, on the BSE on Friday.

Binani Cement posted a net loss of Rs 11.52 crore for the quarter ended December 31, compared with a profit of Rs 57.17 crore in the year-ago period. Keynote Corporate Services was the manager of Binani Cement’s delisting offer.