sebi:WTM/KMA/CFD/396/06/2011
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Facts / Headnote
Exemption granted from complying with Regulation 11(1) of the SEBI (SAST) Regulations, 1997, subject to conditions
Provisions invoked
- s. 19
Regulations
- Reg. 4
- Reg. 4(4)
- Reg. 11(1)
- Reg. 200
- Reg. 4(6)
Holding
SEBI granted exemption to the acquirers (Mandhana family members) from complying with Regulation 11(1) of the Takeover Regulations in respect of their proposed acquisition of 29,71,070 equity shares of Indus Fila Limited through preferential allotment pursuant to a CDR scheme, subject to conditions.
Full text
Page 2 of 6 issue equity shares triggering Regulation 11(1) of the Takeover Regulations. It is further stated in the application that the target company has a consortium lending arrangement with Canara Bank, Corporation bank, Karnataka Bank Limited and Axis Bank Limited and that the target company has restructured its debt under the Corporate Debt Restructuring (CDR) mechanism seeking concessional rate of interest and longer repayment period for the term loans. In terms of the application, one of the critical conditions of the CDR is to convert the unsecured loans of the promoters and promoter group as per the book of account of the company into equity shares and to pledge them with bankers on pari-passu basis. As per the application, the promoter group had advanced an amount of `13.79 crores during 2006 as non-interest bearing unsecured loan at the request of the target company so as to meet debt equity ratio as stipulated by the bankers. It is stated that the target company has received a directive from Canara Bank (consortium lender), vide letter dated October 8, 2010 to convert `8.91 crores of unsecured loans of the promoters into 29,71,070 equity shares at `30/- per share. The present application is filed seeking exemption from the applicability of the said Regulations inter alia on the following grounds: a. The target company on account of economic slowdown and foreign exchange fluctuation has been incurring substantial loss for last two years. To revive the financial p
Page 3 of 6 governing preferential allotment. The allotment does not in any way prejudice the interest of any shareholder or creditors of the target company.
Page 4 of 6 3. Thereafter, the aforesaid application dated April 20, 2011 was forwarded to the Takeover Panel, by SEBI, in terms of Regulation 4(4) of the Takeover Regulations. The Takeover Panel, vide report dated May 12, 2011, has recommended as under: “…...The acquisition is pursuant to the conversion of the unsecured loan given by the acquirers to the target company being a part of the CDR Scheme.
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Source: SecMarx — sebi:WTM/KMA/CFD/396/06/2011. 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.