Thanks for your revert. First part if the value of assets of worth Rs 16250 Cr then why the company in insolvency? The company with able management would definintely get 16250 Cr EV but as per current managment, it is debt of Rs 10,000 cr as on March 31, 2017+ 1450 Cr latest Market cap, giving total value of Rs 11450.
Now if we look at Vedanata bid for the case, it is around Rs 4500 Cr
I am Assuming last 6 months market capitalisation is around 1000 Cr (share price of Rs 2, market cap Rs 500 Cr in June 2017 reached Rs 6 in December 2017, market cap Rs 1500 Cr) and 55% stake of public Shareholder. I also assume that Vedanta offer of Rs 4500 Cr is final and accepted by COC and NCLT.
Now, we need to break link EV and Marker cap as same are interdepedent to arrive at some capital structure. Let us assume again that nearly 400 Cr are infused as Equity be Vednata (after equity write down by say 90%) and balance 600 Cr as OCD in the company. Vednata would offer lenders around Rs 3500 for settlement of 10,000 Cr principal (Rs 13000 Cr total due including interest). So lender took hair cut of Rs 6500 CR of principal and Rs 9500 on Total exposure. In order to sweet the deal for lenders, Vedanata may ask lender to enforce pledge of promoter stake of 45% stake. Subsequently, may write down equity by 90% (my assumption and only ratioanle being past BIFR restructuring where generally such equity writedown were approved).
So revised market cap decline to 100. With Vedanata Equity infusion at 400 Cr, total market cap would be around Rs 500 Cr (of which 80% is Vedanta, It may give some more stake to lenders against debt waiver to make non-Vedanta Stake to 25%).
I know there are limitation, as Enterprise value, Market Capitlisation and Stake of various class equity shareholders are interlinked and moving. We also do not know what kind of new investment/working capital may require to restart of plan.
However, if this assumption is correct, and market capitilsation shall be around 1500 Cr, then existing sharheolder would get Rs 100Cr-900 Cr market cap as against current market capitalisation of around Rs 825 Cr. So the adjusted post restructuring, subject to my “BIG” assumptions, shall range in decline of 88%. to gain of 12%.
I am enclosing my excel for your reference.
Please let me know your view.
Electrosteel Steel working Jan 2018.xlsx