The government will sell 5 per cent stake in Coal India through the auction route to garner over Rs. 8,400 crore to the exchequer and has initiated the process of appointment of merchant bankers for the same.
'The government intends to disinvest 5 per cent of paid up equity capital or over 31.58 crore shares of CIL through Offer for Sale of shares by promoters through the stock exchanges,' the Disinvestment Department said.
The government currently holds 90 per cent stake in CIL.
At the current market price of Rs. 268 apiece, the 5 per cent stake sale would fetch Rs. 8,463 crore to the exchequer.
The government will select up to seven merchant bankers for managing the disinvestment and has invited bids from them by August 26.
The government would also allot shares to CIL employees at a discount of 5 per cent to the lowest cut—off price up to a maximum of 10 per cent of the OFS size following completion of the disinvestment.
The Disinvestment department was originally planning to offload 10 per cent stake in CIL, but faced strong opposition from employees union as they threatened to go on strike.
A trade union has on Wednesday served a notice to the company for a three-day strike beginning September 19.
Union Finance Minister P. Chidambaram had earlier tried to assuage the workers union saying the disinvestment proceeds from the coal behemoth will be invested in PSU banks.
'...I told Coal India people every rupee that we get out of Coal India I am willing to put it in the public sector bank... So we are not converting assets into current expenditure. We are converting one asset into another asset,' Mr. Chidambaram had said.
CIL got listed on the bourses in 2010 through an initial public offering in which the government raised Rs. 15,199 crore by selling 10 per cent stake.
The company has a cash balance of about Rs. 60,000 crore.
The government plans to garner Rs. 40,000 crore this fiscal by way of disinvestment and CIL’s stake sale would be the largest.
So far the government has raised over Rs. 1,300 crore through PSU stake sale.