Vardhman Textiles To Buyback Shares At 13% Premium
Vardhman Textiles Ltd. (VTL) announced on Saturday that it will buy back 61,27,660 equity shares, or 9.63 percent of the total paid up capital and reserves, for Rs 1,175 each.
The maximum buyback price is at 13 percent premium to Friday's closing price. The buyback will cost VTL Rs 720 crore.
As on March 31, 2016, the company had a cash balance of Rs 309 crore and current investments worth Rs 237 crore. VTL recently sold 40 percent stake in Vardhman Yarns & Threads for Rs 413 crore. This proceeds will augment its cash balance.
According to BloombergQuint's calculation, the company would have over Rs 950 crore in cash and current investments to support this buyback plan. The company will use the proceeds from stake sale for buyback and will exhaust as much as 75 percent of its cash balance.
In the current financial year, more than 17 companies have either announced or completed buybacks amounting to more than Rs 25,000 crore. In each of the companies, the promoter held more than 50 percent stake and participated in the buyback, on a proportionate basis, under the tender offer route on the stock exchange. Promoters stake in VTL pre-buyback is at 62.23 percent.
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