sebi:WTM/PS/196/CFD-DCR/MAR/2016

SEBI · SEBI · 1992-08-26 · Prashant Saran, Whole Time Member

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Facts / Headnote

Exemption granted from open offer requirements under Regulation 3(2) of the Takeover Regulations, subject to conditions; application disposed of.

Provisions invoked

• s. 19

Regulations

• Reg. 3
• Reg. 3(2)
• Reg. 200
• Reg. 11
• Reg. 72(2)
• Reg. 11(5)

Holding

SEBI granted exemption to Diamond Projects Limited and Diamond Power Transmission Private Limited from the obligation of making an open offer under Regulation 3(2) of the Takeover Regulations for their proposed acquisition of 1,20,25,424 shares (18.21%) of Diamond Power Infrastructure Limited by way of conversion of warrants pursuant to a JLF-approved restructuring scheme.

Full text

Page 2 of 9 a. The Target Company was established in the year 1970 as a partnership firm and it got converted into a private limited company on August 26, 1992, with the name Diamond Cables Limited. The name was later changed to Diamond Power Infrastructure Limited with effect from October 20, 2007, by obtaining a fresh certificate of incorporation. The Target Company is a power infrastructure provider with presence across conductors, cables, transmission towers, etc. and sells its product under the brand name ‘DICABS’ and ‘DIATRON’. b. The Target Company in August 1993 had come out with an IPO of 30,00,000 equity shares of ₹10 each at par. The Target Company is listed on BSE and NSE and its shares are frequently traded. c. As on the date of the application, the Acquirer namely Diamond Projects Limited was holding 18,68,673 equity shares of ₹10 each in the Target Company, constituting 3.46% of the total capital. There is no holding of Diamond Power Transmission Private Limited in the Target Company. d. The Acquirers namely Diamond Projects Limited and Diamond Power Transmission Private Limited being the promoters of the Target Company have decided to infuse unsecured loan amounting to ₹33,07,00,000 each, aggregating to ₹66,14,00,000 as per the Restructuring Scheme approved by Joint Lenders Forum (hereinafter referred to as ‘JLF’) route. The Acquirers are getting such funds from the internal resources and partly from the promoters of respective companies. e. The proposed Acqui

Page 3 of 9 the lenders had decided to drop the decision of CDR route of restructuring and proceeded with the JLF route. g. The Restructuring Scheme was approved in principal by the lenders on March 11, 2015 which was approved by the Independent Evaluation Committee on May 05, 2015.

Page 4 of 9 the Target Company. With such proposed conversion, the promoters will acquire shares worth ₹66.14 crores of the Target Company. d. The promoters of the Target Company are already holding 34.71% shares. Further, the acquisition of shares worth ₹66.14 crores by the promoters would increase the shareholding of the promoters and promoter group from 34.71% to 46.60%, which is in excess of the threshold limit stipulated under Regulation 3(2) of the Takeover Regulations. e. The promoters are pouring in their personal funds in the form of loan to the Target Company for its betterment and revival. The acquisition of the shares upon conversion is not upon the volition of the Acquirer/ promoters but upon happening of an event which is beyond their control. The same is as per the ‘Final Rehabilitation Scheme’ approved by JLF and on the basis of the same ‘Master Restructuring Agreement’ was executed on May 29, 2015. Hence, in case obligation of open offer is imposed on the promoters then the same will be an additional cost. The cost of compliance of open offer shall be huge and the same will involve lot of time at each stage. f. The proposed Acquirers i.e. Diamond Projects Limited and Diamond Power Transmission Pvt. Limited are part of the promoters’ group companies promoted by Mr. S.N. Bhatnagar, Mr. Amit Bhatnagar and Mr. Sumit Bhatnagar g. In case the Target Company is not given the financial assistance by bankers and the financial institutions than there is scope that the

Source: SecMarx — sebi:WTM/PS/196/CFD-DCR/MAR/2016. 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.