one should consider the promoter shareholding in MOL to calculate this… Promoters own 50% in MOL. Below is my understanding
- In a simple transaction all promoters had to do was get 225 cr for 25% stake and they would have increased their stake to 43%. NBFCs provide funding for promoter buyback (in that case a pledge on cash flows/stock would have been seen as a negative) However the fact that they resorted to such a complicated structure means there is something fishy.
- Effective payment -
Initial 220 cr - Promoters paid 18%*220 i.e their stake in MFL + 83%*50%*220 i.e their stake in MOL which amounts to 131 cr. Therefore the minority bore approx 90 cr
For the repayment of second tranche of 211 cr @ 8% over 10 years - Present Value of 163 cr at 12% discount rate
Promoters will pay 43%*163 i.e their effective stake post transaction + 57% * 50% * 163 i.e their stake through MOL post transaction which amounts to 117 cr
Total Payment = 163+220 i.e 383 cr out of which promoters pay only 131+113 i.e 244 cr
Cant help but ask the question why couldnt the promoters borrow a relatively smaller amount of 225 cr in their personal capacity? May be not to create any pledge on their personal assets or stock … maybe they dont have enough market cap or personal assets to pledge as NBFCs normally ask 2x cover on stock plus hard collateral