HEG LTD- Buyback Case study

Part 2

For this part let us assume that the date today is 29th March,2019.

Case:

On 1st March  2019, the whole timeline till the date of extinguishment of equity shares has been intimated by company through letter of offer.

Within the letter of offer, we get to know the actual shareholding as on record date ie. 9thFeb 2019, we used  Dec 2018 shareholding in the above calculation as that was available on 1st Feb 2019.

          Acceptance for Small Shareholders = 1/10=10%

        Acceptance for General Shareholders= 7/229=3%

Actual Tendering Status

Today, through post buyback public announcement , we come to know about the tendering status. Under Small Shareholder 58% have tendered their shares and Under General shareholder  49% have tendered. 

Tendering is high , Under Small Shareholder out of 2,19,980 shareholders, 1,67,310 shareholders have tendered. Even Under General Category tendering  are  higher. 

The price on 2nd April 2019, trades at 2091/-, gives us 6% pre tax profit under small shareholder and 9% capital loss under General category as acceptance is low under General category. 

Purpose:

The purpose of such case studies is to help all of us become better investors. Cases like these are practice before the main match. Thinking on these various steps can help us develop patterns for what do if these situations would have occurred with us. We would love to know what you would have done in this case?

May we all Learn together

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