sebi:WTM/621/CFD/12/2006

SEBI · SEBI · 2006-05-02 · Dr. T.C. Nair, Whole Time Member

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Facts / Headnote

Application for exemption disposed of; exemption not granted as considering the application for grant of exemption may not be desirable

Provisions invoked

• s. 19
• s. 3(1)

Regulations

• Reg. 4
• Reg. 4(2)
• Reg. 4(4)
• Reg. 11(1)
• Reg. 8(3)
• Reg. 20
• Reg. 11(2)
• Reg. 20(4)
• Reg. 3(1)(l)
• Reg. 4(6)

Holding

The Whole Time Member disposed of the acquirers' application for exemption under Regulation 4(2) of the Takeover Regulations, holding that grant of exemption may not be desirable under the facts and circumstances of the case.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER IN THE MATTER OF ACQUISITION OF EQUITY SHARES OF KOTHARI FERMENTATION AND BIOCHEM LIMITED – EXEMPTION APPLICATION FILED UNDER REGULATION 4(2) OF THE SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997. 1.0 Background 1.1 M/s. Kothari Fermentation and Biochem Limited (hereinafter referred to as “the target company”) is a company limited by shares incorporated under the Companies Act, 1956, having its register at No. 16, Community Centre, First Floor, Saket, New Delhi – 110 017. The equity shares of the target company are listed on the Bombay Stock Exchange Limited (BSE), Delhi Stock E Association Limited (DSE), Calcutta Stock Exchange (CSE), Jaipur Stock Exchange (JSE) and Guwahati Stock Exchange (GSE). The target company has applied for delisting of its shares the CSE, JSE and GSE. The delisting letters are awaited. The target company has been declared sick under section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (he referred to as ‘SICA’) by the Board for Industrial and Financial Reconstruction (BIFR). 1.2 M. L. Kothari, Pramod Kothari, Motilal Kothari (HUF), Pramod Kothari (HUF) and Kavita Kothari (hereinafter referred to as “the acquirers”) are the promotes of the target company and along promoters and persons acting in concert, hold 42.48% of the total equity capital of the target company. 2.0 Application seeking exemption 2.1 The acqui

UNDER REGULATION 4(2) OF THE SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997. 1.0 Background 1.1 M/s. Kothari Fermentation and Biochem Limited (hereinafter referred to as “the target company”) is a company limited by shares incorporated under the Companies Act, 1956, having its registered office at No. 16, Community Centre, First Floor, Saket, New Delhi – 110 017. The equity shares of the target company are listed on the Bombay Stock Exchange Limited (BSE), Delhi Stock Exchange Association Limited (DSE), Calcutta Stock Exchange (CSE), Jaipur Stock Exchange (JSE) and Guwahati Stock Exchange (GSE). The target company has applied for delisting of its shares listed on the CSE, JSE and GSE. The delisting letters are awaited. The target company has been declared sick under section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as ‘SICA’) by the Board for Industrial and Financial Reconstruction (BIFR). 1.2 M. L. Kothari, Pramod Kothari, Motilal Kothari (HUF), Pramod Kothari (HUF) and Kavita Kothari (hereinafter referred to as “the acquirers”) are the promotes of the target company and along with the promoters and persons acting in concert, hold 42.48% of the total equity capital of the target company. 2.0 Application seeking exemption 2.1 The acquirers have, vide letter dated May 2, 2006, filed an application with the Securities and Exchange Board of India (SEBI) under regulation 4(2), read with regulation 3(

2.2.1 The acquirers, along with other promoters and persons acting in concert, are already in control of the target company. The acquisition is for the purpose of bringing funds in the target company for repayment of bank loans. 2.2.2 The acquisition would be done by way of allotment of 16,95,000 preferential share warrants convertible into one equity share for each warrant, within 18 months of the allotment of warrants. The acquisition price would be minimum Rs. 12.72 per share at the time of conversion of share warrants into equity shares. The acquirers would bring minimum 10% of the price at the time of allotment of share warrants. 2.2.3 The acquirers propose to acquire 21.76% of the post- acquisition equity shares/ voting rights of the target company. Pursuant to the acquisition, the shareholding of the acquirers, along with the persons acting in concert, would increase from 42.48% to 54.99% of the total equity capital of the target company. The shareholding pattern of the target company, pre and post-acquisition is as under: Shareholders’ category Number of registered shareholders as on date of application Before the proposed acquisition After the proposed acquisition Number of shares/ total voting rights held % of shares/ total voting capital held Number of shares/ voting rights % of shares/ voting rights Promoter group/ Acquirers 17 25,88,800 42.48% 42,83,800 54.99%

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