Hindustan Zinc had earlier announced plans to spin off its businesses into separate entities, including zinc and silver, to increase its market capitalisation.
Late last month, Hindustan Zinc’s board had directed the company to explore a corporate restructuring to create three different entities for its lead and zinc, silver and recycling business.
Hindustan Zinc Ltd is planning to propose a demerger to its board within the next four to six weeks. The company s board had previously directed it to explore a corporate restructuring to create three separate entities for its lead and zinc, silver, and recycling businesses. The formation of these companies and the distribution of cash and debt will be based on recommendations from consultants. Hindustan Zinc hopes that the demerger will boost its valuations and unlock shareholder value.
Unlocking value in its silver business appears to be the main motivation of the demerger for HZL. Could the promoters be contemplating selling part or all of their stake in the silver company and then use those proceeds to meet their debt obligations?