sebi:WTM/KMA/CFD/245/03/2010
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Facts / Headnote
Exemption granted from compliance with Regulation 11(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, subject to conditions
Provisions invoked
- s. 19
- s. 81
Regulations
- Reg. 5
- Reg. 4(4)
- Reg. 11(2)
- Reg. 200
- Reg. 4(6)
Holding
SEBI granted exemption to GTN Engineering (India) Limited (acquirer) and JEL Finance & Investment Limited (PAC) from complying with Regulation 11(2) of the Takeover Regulations in respect of the proposed acquisition of 60,00,000 equity shares of GTN Industries Limited through preferential allotment pursuant to a CDR scheme.
Full text
Page 2 of 5 the PAC belonged to the promoter group of the target company and that they are holding 1,65,585 equity shares representing 1.43% of the total paid up capital of the target company. The promoter group of the target company holds shares representing 61.45% of the paid up capital in the target company. 2.2 It is further stated that the target company had incurred significant losses in the financial year 2008-09 and had opted for the Corporate Debt Restructuring (CDR) Scheme which was approved on June 25, 2009. It was also stated that as per the CDR Scheme, the promoters of the target company are required to bring their contribution of Rs.750 lakhs against which the target company proposes to issue 60,00,0000 equity shares of Rs.10/- each for cash at a premium of Rs.2.50/- per share on preferential allotment. It was also stated that the shareholders of the target company had approved the proposed preferential issue to the acquirer and PAC under Section 81(1A) of the Companies Act,1956, on January 5, 2010. It is stated that, pursuant to the proposed preferential allotment the shareholding of the acquirer and PAC in the target company would collectively increase from 1.43% to 34.47% and that of the promoter group would increase from 61.45 to 74.64%. Hence, the present application has been filed seeking exemption from the applicability of Regulation 11(2) of the Takeover Regulations inter alia on the following grounds: i. The acquirer and the PAC belong to the promoter g
Page 3 of 5 2.4 Thereafter, the acquirer vide letter dated January 20, 2010 had also filed certain information, as sought by SEBI. 3.0 RECOMMENDATION OF THE TAKEOVER PANEL 3.1 The aforesaid application dated January 12, 2010 was forwarded to the Takeover Panel, by SEBI, in terms of Regulation 4(4) of the Takeover Regulations. The Takeover Panel vide report dated February 8, 2010, has recommended as under: “It was observed by the panel that the Target Company has incurred substantial losses in the financial year 2008-09 and the proposed preferential allotment is pursuant to the CDR Scheme approved on 25/6/2009. The CDR Scheme has envisaged induction of additional funds to the extent of Rs.750 lakhs by the promoters by way of equity so as to improve the Target Company’s debt equity ratio. The proposal of preferential allotment of equity shares to the promoters pursuant to the CDR scheme was found to be in the interest of the shareholders and the Company in general. The Panel therefore recommended the GTN Engineering ( India ) Ltd (acquirer 1,65,585
Page 4 of 5 exemption from the applicability of the provisions of regulation 11(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations.”
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Source: SecMarx — sebi:WTM/KMA/CFD/245/03/2010. 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.