On Tuesday, shares of Allcargo Logistics were locked in an upper circuit of 20 percent, in its new 52-week high of Rs 130.60 apiece on NSE. On the previous day, the Mumbai-based logistics firm informed the stock exchanges that its promoters have proposed a plan to delist the equity shares of the company, a move it says will help it improve credit metrics.
Allcargo Logistics said in its filing that it has received the "Delisting Proposal Letter" from Shashi Kiran Shetty and Talentos Entertainment Private Limited, promoter and promoter group of the company, who have "expressed their intention to, either individually/collectively or together with other members of the Promoter Group, as the case may be," to acquire all the fully paid-up equity shares having a face value of Rs 2, to voluntarily delist them from BSE and NSE.
As of the date, the members of the promoter group collectively hold 17.20 crore shares aggregating to 70.01 percent of the paid-up equity share capital of the company and public shareholders hold 7.36 crore shares aggregating to 29.99 percent.
The "Delisting Proposal Letter" says that the "proposed delisting will align the group's capital and operational structures, streamline the process of servicing the group's financing obligations and significantly improve a range of important credit metrics. As a result, the transaction is expected to support an accelerated debt reduction program in the medium term and, in turn, support the group's highly attractive long-term growth pipeline."
The board of directors will meet on 27 August to discuss the delisting proposal.
Often voluntary delisting, though the opposite of an IPO (initial public offering), is seen as an equal opportunity to make short term gains, raising demand for the stock. Whatever may be the reason for promoters to make their company a privately held entity, shareholders are offered a premium to the price at which the shares are being traded on the exchange. When a shareholder sells to a promoter wishing to delist, the transaction is off the exchange, making the profit a capital gain.