NMDC Ltd is gearing up to seek shareholders’ nod for a special resolution to enable the company initiate the share buyback process.
In a regulatory filing with the BSE, the iron ore mining major informed that the company will seek members’ nod through a postal ballot for buyback of 80,08,25,256 (80.08 crore) equity shares from all the members holding equity shares of the company.
This will be on a proportionate basis through the “tender offer” route at Rs 94 per equity share of face value of Rs 1 each payable in cash for an aggregate consideration not exceeding Rs 7527.75 crore.
The company has engaged the services of NSDL to provide the facility of casting of votes by using electronic voting system. Voting through the physical postal ballot from and through e-voting shall commence on July 4 and end on August 2, 2016.
The process of share buyback leads to acquisition of shares by the company itself. The objective of the buyback is to return surplus cash to the members holding equity shares of the company.
The NMDC board at its meeting held on June 7, 2016 had considered the accumulated free reserves as well as cash liquidity reflected in the accounts for the financial year ended March 31, 2016 and decided to allocate Rs 7527.75 crore for returning to the members holding equity shares of the company through the buyback.
The board has decided to recommend buyback of 20.20 per cent of equity shares.
NMDC sees the buyback help in improving return of equity by reduction in equity base, thereby leading to long-term increase in shareholders value.
The company shares ended at Rs 94.35, up 0.59 per cent on the BSE.