sebi:WTM/KMA/CFD/397/06/2011
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Facts / Headnote
Exemption granted from Regulation 11(2) of the Takeover Regulations subject to conditions
Provisions invoked
- s. 19
Regulations
- Reg. 199
- Reg. 4(4)
- Reg. 11(2)
- Reg. 20
- Reg. 4(6)
Holding
SEBI granted exemption to the acquirers (Surana group) from complying with Regulation 11(2) of the Takeover Regulations with respect to their increase in voting rights from 65.08% to 73.07%, consequent upon the proposed buy-back of equity shares by Bhagyanagar India Limited, subject to specified conditions.
Full text
Page 2 of 6 open market through the stock exchange. As per the application, the aforesaid buy-back proposal has been approved through the board resolution dated January 27, 2011 and through postal ballot by the shareholders of the target company on March 10, 2011. It is further stated that pursuant to the proposed buy-back, the shareholding of the promoter group (including the acquirers) would increase to 73.70% assuming 100% success of the said buy-back. As the proposed buy-back by the target company would increase the voting rights of the acquirers from 65.08% to 73.07% thereby requiring them to comply with the requirements of Regulation 11(2) of the Takeover Regulations, the application has been made seeking exemption from SEBI in respect of making a public announcement as provided under the aforesaid regulation, inter alia on the following grounds: a) The increase in the shareholding of the promoter group (including the acquirers) is only incidental to the proposed buy-back offer of equity shares announced by the target company assuming a 100% response thereto at the maximum shares that could be bought back. b) The aforesaid increase in shareholding would not result in a change in control of the target company. c) The maximum price at which the buyback is proposed is `35/- and is higher than the book value of `32.25/- per share (as on March 31, 2010) and the minimum price of `21.46/- computed in accordance with Regulation 20 of the Takeover Regulations.
Page 3 of 6 It is further stated in the application that the target company has 100 zero coupon Foreign Currency Convertible Bonds (hereinafter referred to as FCCBs) of USD 1.0 lakh each outstanding, due for conversion by October 10, 2011, and if offered for conversion at the option of the Bond holders, would result in an issue of 10445455 equity shares of `2/- each. If all FCCB’s are converted into equity shares, the promoters holding would further reduce to that extent and would become 62.83%.
Page 4 of 6 and voting rights of the acquirers is incidental to the buy-back offer of the target company. The proposed buy-back offer would not result in change in control over the target company, as the acquirers belongs to the promoter group are already in control over the target company. The acquirers have also stated that they do not have any intention to participate in the buy-back of the target company. The increase in the acquirers’ shareholding and voting rights in the target company would be only incidental to the proposed buy-back by the target company. As per the application, even after the proposed buy-back (assuming 100% response), the public shareholding in the target company would be at a level more than what is required for meeting the minimum public shareholding requirement specified in Clause 40A of the Listing Agreement. As per the application, the proposed buy-back would be done through open market in terms of Securities and Exchange Board of India (Buy-Back of Securities) Regulations 1998 and that, the proposed buy-back is at a price `35/- which is higher than the book value i.e. `32.25/- (as on March 31, 2010) and the minimum price of `21.46/- computed in accordance with Regulation 20 of the Takeover Regulations. I also note that acquirers had previously filed an application for exemption with regard to their increase in voting rights in the target company from 59.75% to 69.01% in respect of a buy-back offer proposed in the year 2009. The said applicatio
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Source: SecMarx — sebi:WTM/KMA/CFD/397/06/2011. 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.