Coal India board clears buy back proposal

By: |
Kolkata | July 11, 2016 10:32 PM

Coal India Ltd (CIL) has cleared the proposal of buyback of equity shares following a marathon board meeting on Monday.

coal indiaThe CIL board has approved buyback of ten crore eighty nine lakhs fifty five thousand and twenty three equity shares of the company from all members holding equity on a proportionate basis through the “tender offer” route at a price of Rs 335 per share. (Reuters)

Coal India Ltd (CIL) has cleared the proposal of buyback of equity shares following a marathon board meeting on Monday. The CIL board has approved buyback of ten crore eighty nine lakhs fifty five thousand and twenty three equity shares of the company from all members holding equity on a proportionate basis through the “tender offer” route at a price of Rs 335 per share. The buyback would be 25% of the aggregate fully paid up share capital and free reserves, the company reported the NSE.

However, since this buy back would be 25% of the aggregate fully paid up share capital and free reserves, it has to get the approval of the share holders of the company by way of special resolution through postal ballot. The company would also have to take statutory clearances to make the buyback effective.

A CIL official told fe the process would take at least 6 months and five out eight CIL subsidiaries would likely exercise this option, since three subsidiaries namely Eastern Coalfields Ltd (ECL), Bharat Coking Coal Ltd (BCCL) and Central Mine Planning and Design Institute (CMPDI) are not in a sound financial position to exercise this option. ECL and BCCL have come out of BIFR only a few days back.

However, the buy back is likely to dilute government’s holding a shade above of 3%. At present the government holds 79.65% stake in CIL, while foreign portfolio investors hold 8.52% and Life Insurance Corporation of India 5.86%. CIL has already appointed SBI Caps as an advisor for the buyback exercise.

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