Adani Group announced Scheme of Arrangement

Share:

Editor’s Synopsis

Ahmedabad, January 30, 2015: The board of directors of Adani Enterprises Ltd. (AEL) today unanimously approved the scheme of demerger of the diversified businesses of the company.

 

Adani Enterprises Limited together with its subsidiaries Adani Ports and Special Economic Zone Limited (“APSEZ”) and Adani Power Limited (“APL”) today announced a composite Scheme of Arrangement (“Scheme”) for the demerger of the ‘Port Undertaking’ of AEL into APSEZ and demerger of the ‘Power Undertaking’ of AEL into APL and the emerging simplification of the corporate structure of the Adani Group. The Scheme also involves the demerger of the ‘Transmission Undertaking’ of AEL into Adani Transmissions Limited (“ATL”), a wholly owned subsidiary of AEL and the resulting listing of ATL on the BSE Limited and the National Stock Exchange of India Limited. Further Adani Mining Private Limited (“AMPL”), a wholly owned subsidiary of AEL is proposed to be merged into AEL under the aforesaid Scheme.


Key Highlights

 

  • Demerger of the Port Undertaking of AEL comprising the undertaking, businesses, activities, operations, assets (moveable and immoveable) and liabilities pertaining to the Belekeri port and the investment of AEL in APSEZ into APSEZ;
  • Demerger of the Power Undertaking of AEL comprising the undertaking, businesses, activities, operations, assets (moveable and immoveable) and liabilities pertaining to the 40MW solar power project at Bitta village, Kutch district of Gujarat and the investments of AEL in APL into APL;
  • Demerger of the Transmission Undertaking of AEL comprising the undertaking, businesses, activities, operations, assets (moveable and immoveable) and liabilities related to the Mundra-Zedra transmission line and the investment of AEL in ATL into ATL;
  • Merger of AMPL into AEL; and
  • The appointed date for the Scheme, being the date on which the undertakings shall vest in the respective resulting companies, has been fixed at April 1, 2015.

 

The Scheme of Arrangement will simplify corporate structure providing the shareholders of AEL direct shareholding in the respective operating companies, listing of one of the largest private sector transmission companies with over 5,000 circuit kms of transmission lines across Western, Northern and Central regions of India and increase free float at APL and APSEZ.

 

Transaction is expected to unlock value for the shareholders of AEL by eliminating holding company discount.

 


Proposed Transaction Steps and Demerger Share Entitlement Ratio

 

  • Pursuant to the demerger of the Port Undertaking of AEL into APSEZ, APSEZ to issue and allot new equity shares to the equity shareholders of AEL in the ratio of 14123 equity shares in APSEZ for every 10000 equity shares held by the equity shareholder in AEL as of the record date for the purpose of the Scheme. The equity shares held by AEL in APSEZ to be cancelled pursuant to the Scheme.
  • Pursuant to the demerger of the Power Undertaking of AEL into APL, APL to issue and allot new equity shares to the equity shareholders of AEL in the ratio of 18596 equity shares in APL for every 10000 equity shares held by the equity shareholder in AEL as of the record date for the purpose of the Scheme. The equity shares held by AEL in APL to be cancelled pursuant to the Scheme.
  • Pursuant to the demerger of the Transmission Undertaking of AEL into ATL, ATL to issue and allot new equity shares to the equity shareholders of AEL in the ratio of 1 equity share in ATL for every 1 equity share held by the equity shareholder in AEL as of the record date for the purpose of the Scheme. The equity shares held by AEL in ATL to be cancelled pursuant to the Scheme.

 

ATL is currently in the process of acquiring 100 per cent of the outstanding equity share capital of Adani Transmission (India) Limited (“ATIL”) from APL and Adani Power Maharashtra Limited (“APML”, a wholly owned subsidiary of APL). ATL is also in the process of acquiring 100% of the outstanding equity share capital of Maharashtra Eastern Grid Power Transmission Company Ltd. (MEGPTCL) from AEL. The acquisition is subject to the approval of the shareholders.

 

ATL to be listed on the BSE Limited and the National Stock Exchange of India Limited pursuant to the Scheme and subject to the exemption to be granted by the Securities and Exchange Board of India (“SEBI”) under Rule 19(7) of the Securities Contract (Regulation) Rule, 1957, as amended (“SCRR”) from the strict enforcement of the requirements of Rule 19(2)(b) of the SCRR.

  • AMPL to be merged into AEL. No equity shares are proposed to be issued pursuant to the merger as AMPL is a wholly owned subsidiary of AEL.
  • The transactions contemplated under the Scheme are expected to close by December 31, 2015. It may however be noted that certain transactions may be completed earlier and the aforesaid date of December 31, 2015 is only an indicate timeline and is subject to timely receipt of all applicable regulatory and statutory approvals.

 

Transaction Advisory, Recommendations and Fairness Opinion

 

The Boards, including the independent directors of AEL, APSEZ and APL have approved the proposed Scheme and recommended the same in the interest of their respective shareholders.

 

M/s B S R & Associates provided to the Boards of AEL, APSEZ and APL their recommendation on the each of the ‘Demerger Share Entitlement Ratio’ for consideration by the respective Boards.

 

The Board of Directors of AEL received opinion from JM Financial Institutional Securities Limited (“JM Financial”) on the fairness of each of the Demerger Share Entitlement Ratio, from a financial point of view. JM Financial was the lead financial and transaction advisor. Macquarie Capital was the advisor for the transaction.

 

The Board of Directors of APL and APSEZ received opinion from Axis Capital Limited, on the fairness of the respective Demerger Share Entitlement Ratios, from a financial point of view.

 

The Board of Directors of AEL received opinion from Dhruva Advisors LLP and GK Choksey & Co. from a Taxation point of view.

 

The Board of Directors of AEL received opinion from Ms. Singhi & Co. from a Legal point of view.

 

Approvals

 

The Scheme is subject to the approval from:

 

  • BSE Limited and the National Stock Exchange of India Limited;
  • Securities and Exchange Board of India;
  • Simple majority of the public shareholders of each of AEL, APL and APSEZ in terms of the applicable SEBI regulations, circulars and guidelines
  • Shareholders and creditors of each of AEL, APL and APSEZ
  • Hon’ble High Court of Gujarat; and
  • Such other regulatory and statutory approvals as may be required.

© 2018 Adani Group