sebi:WTMO/11/CFD/09/2005

SEBI · SEBI · 2005-01-22 · Madhukar, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Exemption granted from compliance with Regulation 11(1) of the Takeover Regulations, subject to conditions

Provisions invoked

• s. 19
• s. 15

Regulations

• Reg. 4
• Reg. 3
• Reg. 5
• Reg. 2
• Reg. 4(2)
• Reg. 11(1)
• Reg. 3(4)
• Reg. 6
• Reg. 11

Holding

SEBI granted exemption to the promoter-directors of Coromandel Cements Limited from complying with Regulation 11(1) of the Takeover Regulations in respect of the proposed acquisition of 30,00,000 equity shares through preferential allotment, subject to fulfillment of specified terms and conditions.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER IN THE MATTER OF PROPOSED ACQUISITION OF SHARES OF COROMANDEL CEMENTS LIMITED – EXEMPTION APPLICATION FILED UNDER REGULATION 4(2) OF THE SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997. WTMO/11 /CFD/ 09 /2005 1.0 BACKGROUND 1.1 M/s Coromandel Cements Limited (hereinafter referred to as ‘the target company’) is a public limited company incorporated under the Companies Act, 1956, having its registere at No.6-3-652/C/A,Flat 5A, KAUTILYA, Amrutha Estates , Besides Medinova, Somajiguda, HYDERABAD-082. 1.2 The equity shares of the target company are listed on the Stock Exchange, Mumbai and Hyderabad Stock Exchange. 1.3 The following are the persons belonging to the promoter group (hereinafter referred to as ‘acquirers’) of the target company:

Taking the totality of the circumstances into consideration and facts stated, grant of exemption as sought is recommended subject to the compliance with the applicable prov the Companies Act, 1956.” 4.0 FURTHER SUBMISSIONS MADE BY THE ACQUIRER 4.1 The acquirers, vide letter dated June 02, 2005 further confirmed that they will comply with the following terms and conditions as per SEBI norms: “(a) A General Meeting of shareholders is called for passing a fresh Special Resolution U/s 81(1A) of Companies Act for the said preferential allotment to prospective acquire (b) Following disclosures are made in the explanatory statement U/s 173 of the Companies Act forming a part of the Notice: - the price at which the allotment is proposed. - the identity of such person(s) - consequential changes, if any, in the board of directors of the -target company and in voting rights, the shareholding pattern of the company, and - whether such allotment would result in change in control over the target company. (c)The guidelines for preferential allotment (including pricing) as prescribed under chapter 13 of SEBI (Disclosure and Investor Protection) Guidelines, 2000 are complied wit (d) Facility of voting through postal ballot for passing of the special resolution as per the procedure laid down for postal ballot in rule 2A and rule 5 of “Companies (Pa Resolution by Postal Ballot) Rules, 2001 is provided, (e) The prospective acquirers (promoter group) of the target company, being interested part t

2.3 In accordance with the rehabilitation package the promoters of the target company have subscribed to 15, 66,710 equity shares of Rs 10 each of the target company and have brought in Rs. 1, 56, 67,100 into the target company and the target company has repaid all its dues to the financial institutions such as IDBI, IFCI, &ICICI to the tune of 6.09 crores. After this additional capital brought in by promoters, the shareholding of the promoters in the target company is 52.38% of the total paid up capital of the target company. Out of this 52.38% , the acquirers together hold 42.97% of the total paid up capital of the target company. 2.4 There is significant progress in terms of operational efficiency and productivity in target company. It has potential to improve the turnover substantially with additional capital of Rs. 20 crores. The target company had therefore, approached the bankers for term loan. Their bankers for term loans have insisted that the promoters shall bring in adequate margin money in the form of equity to improve debt / equity ratio for sanction of term loan. The acquirers (promoter – directors) desire to expand the operation of the target company. In this regard, they propose to infuse Rs. 3 crores into the capital of the target company by way of preferential allotment of equity shares at par. 2.5 The proposed preferential allotment of 30,00,000 equity shares (37% of the enhanced capital) to acquirers would result in an increase in the shareholding of the a

Source: SecMarx — sebi:WTMO/11/CFD/09/2005. 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.