Govt. mulls put, call options for HZL sell-off

NEW DELHI, MARCH 19. The Union Government has decided to incorporate put and call options in the shareholders agreement for Hindustan Zinc (HZL) thereby paving the way for further diluting its stake in the public sector unit.

The move is part of the Government's efforts to further reduce its stake in the zinc major to 26 per cent from the current 76 per cent.

Official sources told PTI that put option would enable Government to offer the strategic partner right to further increase its stake in the PSE to 49 per cent. The Government has decided to sell up to 26 per cent stake in the company in the first tranche of disinvestment. It has mandated global advisor Banque Nationale De Paris-Paribas (BNP-Paribas) to act as global advisor for the sell off.In case the strategic partner refuses to pick up the stake then the Government would have the option of offloading the same to other investors. On the other hand the call option would enable the strategic partner to ask the government to offload its stake to the former.

As per details available, the Government could exercise the put option within 6 to 24 months of the strategic sale. Whereas, the call option could be exercised after the expiry of the period for put option and before the end of the fifth year from the date of strategic sale.

The Government has also decided to incorporate a clause in the shareholders agreement specifying a five year lock in period. This means the strategic partner would not be able to transfer its stake to a third party within the stipulated period.

The Government has also shortlisted nine players for acquiring stake in HZL including steel baron Mr. L. N. Mittal, domestic mining giants Birla Copper and Sterlite Industries.

Among the foreign players keen on picking up stake in HZL are Swiss metals major Glencore and copper giant Phelps Dodge.

The Centre has also stipulated that a strategic partner would be required to make an open offer for additional 20 per cent stake in the zinc major as per the Securities and Exchange Board of India guidelines. This means the bidders would be required to make an offer for 46 per cent stake in HZL.

Send this article to Friends by E-Mail

Section  : Business
Previous : Bullion rates
Next     : Erratic movements in equities