sebi:WTM/KMA/CFD/209/01/2010
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Facts / Headnote
Exemption granted
Provisions invoked
- s. 19
Regulations
- Reg. 4
- Reg. 11
- Reg. 11(1)
- Reg. 3(5)
- Reg. 3(4)
- Reg. 6
- Reg. 4(6)
Holding
SEBI granted exemption to the seven promoter-group acquirers from Regulations 11(1) and 11(2) of the Takeover Regulations, 1997 with regard to the proposed preferential allotment of 50,00,000 equity shares of Nitin Spinners Limited at Rs. 10/- per share.
Full text
Page 2 of 7 Trading & Investments Private Limited, Greenfield Securities Private Limited, Prasham Corporate Services (India) Private Limited, Dolphin Carriers Private Limited, Ratan Lal Nolkha HUF, Dinesh Nolkha HUF and Ranjeeta Nolkha HUF (hereinafter collectively referred to as the acquirers). It is stated in the application that the acquirers belong to the promoter group of the target company. The said application was with respect to the proposed preferential allotment of 50,00,000 equity shares of the target company against promoters’ contribution as per the Corporate Debt Restructuring (hereinafter referred to as CDR) Scheme, which would increase the shareholding of the promoter group from the present level of 54.99 % of the paid up capital to 59.90 % of the increased share capital. Accordingly, the acquirers filed the present application seeking exemption from the provisions of Regulation 11 (1) of the Takeover Regulations, inter alia, on the following grounds: (a) As per CDR Cell’s approval dated June 16, 2009, promoters of the target company are required to contribute minimum 15% of the present value of the ‘sacrifice of interest by the Banks’ or Rs. 5 Crores, whichever is higher, out of which at least 50% should be by way of equity share capital.
Page 3 of 7 (c) The proposed preferential allotment shall be made in accordance with the provisions of the Companies Act, 1956 and other relevant guidelines.
Page 4 of 7 October 6, 2009 (received by SEBI on October 15, 2009). Thereafter, SEBI advised the acquirers to inform the current status of implementation of the CDR scheme. In response, Redial Trading & Investments Private Limited, vide letter dated November 16, 2009, furnished a letter from the monitoring institution of the CDR Cell, viz. Oriental Bank of Commerce, specifying the present status of implementation of the various conditions stipulated in the CDR package. 4.0 RECOMMENDATION OF THE TAKEOVER PANEL 4.1 The aforesaid application was forwarded by SEBI to the Takeover Panel in terms of Regulation 4 (4) of the Takeover Regulations and the Takeover Panel, vide report dated December 21, 2009 has recommended as under: “The proposed allotment of equity shares is pursuant to the recommendations of CDR Cell. Further, the proposal of Preferential Allotment has been approved by the shareholders of the Company at its Annual General Meeting held on September 29, 2009. The Panel also noted that the Right Issue is not possible as the Target Company’s shares are being quoted below par. Giving due weightage to all these factors, the Panel found the proposal to be in the interest of the public shareholders whose shareholding even after proposed Preferential Allotment would be 40.10%. The Panel therefore recommended exemption to the Applicant subject to compliance of other relevant provisions in the Companies Act, 1956, SEBI Regulations and Listing Agreement.”
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Source: SecMarx — sebi:WTM/KMA/CFD/209/01/2010. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.