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Vedanta plans to sell a 2.6% stake in Hindustan Zinc via OFS, impacting share prices. Hindustan Zinc fell 4.57% to ₹586.35, while Vedanta dropped 2% to ₹422.7. Vedanta owns 64.92% of HZL and is planning business demergers.
Metals and mining giant Vedanta Ltd has announced its decision to divest a portion of its equity in Hindustan Zinc Ltd through an Offer for Sale (OFS) mechanism. The company plans to sell up to 11 crore Hindustan Zinc shares, representing 2.6% of the equity share capital.
The decision was approved by Vedanta’s Committee of Directors on August 13, 2024. While the exact date for the OFS has not been disclosed, the announcement has already influenced the market.
Following the news, Hindustan Zinc share price saw a significant decline, closing 4.59% lower at ₹586 on the NSE. Vedanta's share price also reacted negatively, ending the day 1.65% lower at ₹424.95 on the NSE.
As of the June 2024 quarter, Vedanta held a 64.92% stake in Hindustan Zinc, while the Indian government retained a 29.54% share. The planned sale is part of Vedanta’s broader strategy to streamline its operations and reduce financial risk.
The company has announced plans to demerge its aluminium, oil and gas, power, base metals, and iron and steel businesses into separate listed entities. This demerger is expected to reduce refinancing risks and decrease the company's reliance on dividends from Vedanta Resources Ltd (VRL).
Expected Dividend Payout
In related news, Hindustan Zinc is anticipated to declare a special dividend of ₹6,000 crore to its shareholders this month. Last month, the National Company Law Tribunal (NCLT) approved the transfer of ₹10,383 crore from Hindustan Zinc’s general reserves to retained earnings.
Should the dividend payout occur, Vedanta, which owns a 64.92% stake, would receive ₹3,895 crore, which it may use to reduce its debt burden.
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