sebi:WTM/PS/07/CFD-DCR-1/MAY/2013

SEBI · SEBI · 2013-02-25 · Prashant Saran, Whole Time Member

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Facts / Headnote

Exemption granted from regulations 3(2) & (3) of the Takeover Regulations for proposed acquisition of 91,80,000 equity shares, subject to conditions.

Provisions invoked

• s. 19

Regulations

• Reg. 3(2)
• Reg. 11(5)

Holding

SEBI granted exemption to Mr. Shantanu Prakash from the applicability of regulations 3(2) and 3(3) of the Takeover Regulations with respect to his proposed acquisition of 91,80,000 equity shares, which would increase his individual shareholding from 28.70% to 36.20% and the promoter group's shareholding from 37.30% to 44.80%.

Full text

Page 2 of 6 The Acquirer has stated that the following inter alia were some important terms and events.  As per the facility agreement, if at any time, the Collateral Cover would be less than the Liquidation Collateral Cover (the value of the Collateral Cover is less than or equal to 1.55 times the total liabilities as at the relevant time of calculation), it would result in mandatory prepayment event.  If on any calculation date after the initial cover date, a Collateral Event (means at any time, the collateral cover is less than or equal to 1.8 times the total liabilities as at the relevant time of calculation) occurred, the Acquirer was to procure that the Collateral Cover was restored to atleast the Initial Collateral Cover (the value of the collateral cover would be atleast equal to 2.1 times the total liabilities on the Initial Cover Date).  In order to restore the collateral cover to the initial collateral cover following the occurrence of a collateral event, the Acquirer was to pledge additional shares in favour of the lender. The Acquirer was entitled to restore the collateral cover by way of a share top-up only on the first two occurrence of a collateral event. Any restoration of the collateral cover after the first two occurrences of a collateral event shall only be permitted by way of a cash repayment.  If at any time, the aggregate number of shares pledged with the lender or held by any of its affiliates exceeded 7.5% of the total shares of the company, no re

Page 3 of 6 started to arrange for funds and made a part payment of  2 crore on February 28, 2013. Though the Acquirer arranged for funds to the tune of  20 crores by March 02, 2013, the same could not be made on account of curtailed banking business hours, the payment had to be arranged by a demand draft. However, Macquarie invoked the pledge on March 02, 2013 itself. The Acquirer has stated that the said loan has now been partly paid and that the lender, Macquarie has agreed to credit back the pledged shares (91,80,000 shares) to the Acquirer. The Acquirer (a promoter of the Target Company) presently holds 3,51,35,205 shares (28.70%) in the Target Company in his individual capacity and holds 4,56,58,245 equity shares (constituting 37.30%) together with other promoters. On receipt of shares (i.e. return of the pledged shares) from Macquarie, the shares/ voting rights of the Acquirer (individually) would increase from 28.70% to 36.20% and the shares/ voting rights of the promoter group would increase from 37.30% to 44.80%, thereby triggering regulations 3(2) and (3) of the Takeover Regulations. This application has been preferred seeking exemption from the applicability of the said provisions of the Takeover Regulations on the following grounds :

Page 4 of 6 f. Even after the proposed acquisition, the Target Company would continue to comply with clause 40A of the listing agreement. g. There is no fresh acquisition of shares by the Acquirer since the shares proposed to be transferred to the Acquirer belongs to Acquirer only and for which no fresh consideration needed to be paid.

Source: SecMarx — sebi:WTM/PS/07/CFD-DCR-1/MAY/2013. 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.