Sebi rejects Larsen & Toubro's Rs9,000cr buyback offer

Notably, SEBI has cancelled the buyback offer since the ratio of the aggregate of secured and unsecured debts owed by the company after the buyback (assuming full acceptance) would be more than twice the paid-up capital and free reserves of the company based on consolidated financial statements.

Jan 21, 2019 03:01 IST India Infoline News Service

Larsen and Toubro
Sebi rejected Larsen & Toubro's Rs9,000cr share buyback plan, citing compliance issues over its post-buyback debt-equity ratio. The company said that Sebi has advised the firm against proceeding with the share buyback.

Notably, SEBI has cancelled the buyback offer, since the ratio of the aggregate of secured and unsecured debts owed by the company after buyback (assuming full acceptance) would be more than twice the paid-up capital and free reserves of the company based on consolidated financial statements.

"Since the ratio of the aggregate of secured and unsecured debts owed by the company after buyback (assuming full acceptance) would be more than twice the paid-up capital and free reserves of the company based on consolidated financial statements," the buyback offer is not in compliance with the Companies Act and Sebi norms, the SEBI said in a letter to the company.

The company had proposed to buyback up to 6.1cr shares from shareholders at a price of Rs1,475 per equity share, aggregating to Rs9,000cr, the company said in the filing. The offer was open to those holding equity shares as of October 15.

Pursuant to the approval of the buyback by the shareholders of the Company, a draft letter of offer ('DLOF') was submitted to Sebi in terms of Regulation 8(i)(a) of the Buyback Regulations for their comments.

"Since the ratio of the aggregate of secured and unsecured debts owed by the Company after buy-back (assuming full acceptance) would be more than twice the paid-up capital and free reserves of the Company based on consolidated financial statements of the Company, the buyback offer is not in compliance with Section 68(2)(d) of Companies Act, 2013 and Regulation 4(ii) of SEBI (Buy-back of Securities) Regulations, 2018. You are therefore advised not to proceed with this buy back offer," the company added in the filing.

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