JOIN USThe government will sell 3.56 per cent stake in Neyveli Lignite Corporation (NLC) at a price band of Rs 58-60 apiece, which will fetch around Rs 350 crore to the exchequer.
The issue will hit the markets on August 2, Disinvestment Secretary Ravi Mathur told reporters after the meeting of the Empowered Group of Ministers (EGoM).
The government is selling 3.56 per cent stake or over 5.58 crore shares in NLC through an institutional placement programme (IPP) in which the Tamil Nadu based state entities would be given preference while allotment of shares.
"The price band for the IPP has been fixed at Rs 58 to Rs 60 per share," NLC said in a filing to the BSE.
Earlier this month, market regulator Sebi had given go-ahead to the disinvestment department's proposal to give preference in share allotment to those PSUs located in states in which Neyveli's generating units were located.
Tamil Nadu government has been insisting that it would buy the entire central government stake that is being divested in the state lignite mining and power producing company and had written to Prime Minister Manmohan Singh in this regard last month.
The TN government has said it has 5 state PSUs which can be qualified as QIBs (Qualified Institutional Buyer). The DoD has sought exemption from Sebi so that preference is given to allot shares to these PSUs only.
Shares of NLC closed at Rs 54.35, down 4.82 per cent over previous close on the BSE.
Government currently holds 93.56 per cent stake in NLC and the share sale in done to meet the minimum public holding norm of market regulator Sebi.
Sebi has set a deadline of August 8, 2013, for all listed central public sector units to have a minimum 10 per cent public shareholding.
The department of disinvestment (DoD) was originally planning to divest 5 per cent of its stake in the Tamil Nadu-based mining company.
However, since the IPP mode is allowed only to bring down promoter stake to 10 per cent, the department would now sell only 3.56 per cent or over 5.58 crore shares in the company to lower government stake to 90 per cent.