Acquirers of listed PSUs will have to make open offer

However, in the case of companies like Air India and Indian Airlines, acquirers will not have to make open offers as these companies are unlisted firms fully owned by the government. Acquirers of MTNL and VSNL, if and when disinvested, will have to make open offers under the SEBI rules.

"The public offer will have to be made to theshareholders of HZL (where government has 75.92 per cent equity) to acquire from them an aggregate minimum of 20 per cent of the voting capital of HZL," it said, adding that further details could be acquired from the SEBI regulations in this regard.

Official sources said the open offer would have to be made at the same price at which the strategic bidder would acquire the 26 per cent stake in the company. This means that a total of 46 per cent equity stake ie. 26 plus 20 per cent would be on offer for the strategic investor to acquire in the company.

The condition has been put in place to protect interests of the small investor who might otherwise not have a chance to exit the company in the case of an investor acquiring a say in the management. The 26 per cent stake assumes importance as the acquirer has the power to block crucial resolutions and effect a change in the name of the company.

Several mining giants including Sterlite Industries and Binani Zinc have already announced their intention to bid for stake in the company.

The government has mandated Banque Nationale De Paris-Paribas (BNP-Paribas) to act as the global advisor for the proposed disinvestment in HZL.

Amongst the other conditions laid down in the PIM are that the interested parties wanting to partake in the process should have a turnover of not less then Rs 600 crore. The net worth requirement has been placed at Rs 350 crore.

The net worth and turnover criteria are applicable to groups as a whole in case bidders take part as a joint venture partners or as consortium. The government has set January 15, 2001 as the last datefor filing of expression of interest (EOI) in the company.

HZL is the only public sector zinc producer in the country and enjoys a near monoploy status in the market. The only other competitor is Binani Zinc. The government had earlier in 1991 diluted its stake in the company by divesting 20 per cent of the equity in favour of mutual funds and financial institutions at a price of Rs 25 per share.

In 1992, the government offloaded a further 4 per cent equity in favour of the mutual funds and institutional investors at an average price of Rs 21.HZL shares are currently being traded on the Mumbai, Jaipur and Delhi stock exchanges.