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Andhra sets the VST pullout ball rolling

Aug. 2: The Andhra Pradesh (AP) government today said investors willing to pick up its substantial holdings in six blue-chip listed companies will have to file ‘expressions of interest’ latest by August 14.

These are VST Industries, Associated Cement Companies (ACC), Tata Engineering and Locomotive Company (Telco), Sirpur Paper, Bakelite Hylam and Hyderabad Industries.

The AP government holds 7.23 lakh shares in VST, which represents 4.69 per cent of the company’s equity capital. In Sirpur Paper, it holds 5.29 lakh shares or roughly 6.34 per cent of the company’s equity capital.

In Hyderabad Industries, promoted by the C. K. Birla group, the AP government holds 3.05 crore shares or 4.27 per cent. In Bakelite Hylam, it holds 8.85 per cent. Its investment in the two other companies — Telco and ACC — is minuscule.

Tobacco major ITC and a Mumbai-based broker are expected to lock horns over the divestment of the AP government’s stake in VST.

British American Tobacco Plc owns 32.16 per cent in VST, a company promoted by the erstwhile Nizam of Hyderabad.

Bright Star Investments — a firm owned by Mumbai-based stockbroker R. S. Damani — had acquired 15 per cent of VST’s shares from the market, and made an open offer for another 20 per cent in 2001.

Bright Star scooped a little over 4 per cent of VST shares through the cash offer, and currently holds 19.7 per cent in VST, having raised its holdings over the last couple of years.

Sources close to the Damanis had earlier indicated that they were likely to pitch for the AP government’s stake in the company.

In response to Bright Star’s bid, ITC’s investment subsidiary Russell Credit made a cash offer for 20 per cent of VST’ shares.

Russell Credit picked up around 10 per cent through the bid but has since increased its holding to 10.5 per cent.

ITC, too, had previously said it would consider bidding for the AP government’s stake.

The Public Enterprise Department of the AP government said bidders would have to pay 25 per cent of their bid amount by August 29.

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