The Hindu Business Line : Malco delisting: Physical shares now hold the key

EVEN as Twinstar Holdings is deciding on the cut-off price for the buyback for Malco shares, it is possible that the company may have to cross many roadblocks before it goes ahead with the delisting as planned.

The cut-off price is likely to be set at Rs 240 as the maximum number of bids have come in at this price.

The floor price for the offer was Rs 181, but the company received no bids at that rate.

A total of 22.48 lakh shares were bid during the process, amounting to only 50 per cent of the offer size.

Indications are that, at this level, the company's holding will add up to barely above 85 per cent.

In order to proceed with the delisting, Twinstar Holdings must hold at least 90 per cent stake in the company.

The announcement of the cut-off price is expected in a day or two. Once this is announced, the company can start communicating to holders of non-demat shares to send in their physical certificates, if they want to participate in the reverse book build.

The delisting will go through only if the total of the demat and physical shares received add up to 90 per cent.

Another spanner in the works for this deal is the stake held by Tamil Nadu Industrial Investment Corporation (TIIC).

TIIC holds 3.11 per cent stake in Malco and has bid at Rs 2,091 for the buyback.

Twinstar Holdings now has to convince TIIC to accept the cut-off price of Rs 240.

Holders of physical shares will get a 15-day notice to participate in the buyback after the cut-off price is announced.

Only after the verification of physical shares will the company be able to assess whether they have the required number of shares or not.

The Malco offer has been on a controversial road since it was announced.

A section of shareholders had complained to the SEBI that the floor price was undervalued and that the shares are actually worth Rs 670.

Malco and its investment banker for the issue, ICICI Securities, had countered that the price complied with SEBI's regulation of average market price for the past 26 weeks.

The bid was open for five days and closed on March 18.

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