The Andhra Pradesh government decided to carry out the entire divestment exercise of Godavari Fertilisers and Chemicals Ltd as per Securities and Exchange Board of India regulations that are applicable to public sector undertakings.
The decision will prohibit unsuccessful bidders from coming out with a counter public offer when the successful bidder announces an open offer to acquire 20 per cent stake from the public shareholders as per Sebi guidelines.
"We have taken the decision to prevent any unhealthy competition in the bidding process and to provide a comfort level to all the bidders by removing the uncertainty of counter public offer by any unsuccessful bidder", Deepak Kumar Panwar, the secretary of the state public enterprises department, told Business Standard.
Panwar said Sebi had given its consent for the same. He said the state government had also decided to add an escalation clause to the price bidding.
As per the new clause, if the successful bidder comes out with an open offer at a price that is higher than the price quoted in the bid submitted to the government, then the bidder has to pay the same open offer price to the government too.
"This decision was taken to safeguard the interests of the state government by getting the maximum price for its stake", Panwar said.
"The two clauses are meant for every bidder. We have conveyed them about the new clauses and they accepted the changes", Panwar said when asked whether there would be any legal complications on the changes made after the initiation of bidding process. Panwar is confident that the divestment exercise would be a great success.
As per the bidding process, all the eight registered bidders will have to submit their bids before the deadline of June 21.
While the evaluation of commercial, technical and financial parts of the bids will be completed by June 28, the price part of the bids will be opened on July 2. The transaction is expected to be completed by August.