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Reliance MediaWorks to delist

MUMBAI: Anil Ambani-controlled Reliance MediaWorks Ltd (RMWL), which is in bad economic health, will delist from the bourses.

The film and entertainment services company, which is heavily loaded with debt and has its net worth eroded, has got the board approval to go ahead with its delisting offer.

It may be recalled that the right issue received tepid response from the investors. In fact, the promoter group entities could consolidate their holding to 73.3 per cent as they had to subscribe for the entire issue.

In July 2013, the company raise Rs 599.64 crore ( Rs 5.99 billion) through right Issue in the ratio of 13:4. It had offered 14.99 crore shares ( 149.9 million shares) of Rs 5 face value at a premium of Rs 35. However, the right issue provided little boost to RMWL’s share price which was languishing north of Rs 35 per share.

The delisting announcement firmed up the share prices of RMWL. Opening the Monday’s trading session at Rs 53 per share on the BSE, RMWL rose 19 per cent following the board approval. After moving in a narrow band of Rs 52 and Rs 55, the share hit an upper circuit of 20 per cent limit at Rs 55.65.

RMWL had clocked 52-week high of Rs 72.66 on 18 January 2013 and a 52-week low of Rs 36.90 on 7 August 2013.

In its meeting held Monday, the company’s board approved the delisting proposal made by RMWL’s promoter entities—Reliance Land Private Limited and Reliance Capital Limited.

The company will now seek the approval of its shareholders through postal ballot as prescribed by the SEBI.

Given the negligible holding of institutional investors (FIs/FIIs holding at 0.30 per cent), the company can hope to sail through its delisting offer successfully.

RMWL’s total paid-up capital stands at Rs 96.60 crore (Rs 966 million) comprising 19.32 lakh shares (1.93 million) of Rs 5 each.