Essar Steel fixes Rs 38 floor price for delisting

The Ruias-promoted Essar group today said it plans to delist Essar Steel from the bourses and fixed a floor price of Rs 38 apiece for buying the stake from public shareholders.

The promoters already have 87.08 per cent stake in the company and the open offer is for the remaining 12.92 per cent, comprising 14.72 crore shares.

As per the offer, shareholders will have to place their bids around the floor price, after which the company will decide on the exit price.

The Ruias need a minimum of 90 per cent stake to delist the company. According to the public announcement today, the floor price is higher than the average price of the company's shares in the preceding 26 weeks. The company's scrip settled at around Rs 43 yesterday on the Bombay Stock Exchange.

Giving rationale for delisting, Essar Steel Holding, the Essar group company which will acquire the shares, said delisting is meant to offer exit opportunity for shareholders and to offer more flexibility in running the company.

The company has 4.6 million tonne per annum of steel making capacity. It also has equity interest in steel manufacturing facilities in Canada.

As per the reverse bookbuilding process, the minimum or the 'discovered' price will be the price at which the greatest number of shares are offered. However, the company said it is not under any obligation to accept the discovered price.

It said it may accept the discovered price or announce an exit price.

The bidding by shareholders will be held between September 24 and 28. The company will announce its exit price or its acceptance of the discovered price or otherwise on October 3.