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Vedanta Update: Promoters pledge entire stake!

Vedanta Update: Promoters pledge entire stake!

Last updated: 29 Dec, 2020 | 12:21 pm

Vedanta Update: Promoters pledge entire stake!

  • Vedanta's promoters have created a pledge on the entire 55.11% equity stake as per the latest announcement made by the company. 
  • The promoters have entered into a subscription agreement with OCM Verde Investment XI Investment Pte Ltd. where they will issue $400,000,000 notes of nominal value $1 each in favour of OCM. The pledge has been created to secure this obligation. The purpose of the fundraising has not been made clear. 
  • Pledging of shares means keeping the promoter’s stake as collateral to avail a loan or other benefit. The ownership of the shares is thus retained with the promoters. The value of the collateral moves in tandem with the fluctuation in the share price.
  • Pledging of shares can create a problem when the value of collateral erodes and the lenders invoke the pledge buy selling the shares in the open market, further putting selling pressure on the stock.
  • Recently Vedanta’s promoters increased their stake by 5% buy purchasing the stock in the open market, we had covered the same in our previous report (Read here).
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