sebi:WTMO/2/CFD/4/04

SEBI · SEBI · 2004-02-12 · A. K. BATRA, WHOLE TIME MEMBER

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Facts / Headnote

Exemption granted from complying with Chapter III of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, subject to conditions

Provisions invoked

• s. 19
• s. 81
• s. 173

Regulations

• Reg. 4
• Reg. 3
• Reg. 12
• Reg. 3(4)

Holding

SEBI granted exemption to Global Asia Partners LP from complying with Chapter III of the Takeover Regulations for the proposed acquisition of 30,66,217 shares (27.92%) of ORG Informatics Ltd through conversion of loan into equity, subject to conditions including a fresh special resolution under Section 81(1A), prescribed disclosures, compliance with SEBI DIP Guidelines, postal ballot facility, and abstention from voting by the acquirer.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ In The Matter Of Proposed Acquisition Of Shares Of Org Informatics Limited -exemption From The Provisions Of Chapter III Of The SEBI (Substantial Acquisition Of Shares And Takeovers) Regulations, 1997 Apr 07, 2004 | Orders : Orders of Chairman/Members SECURITIES AND EXCHANGE BOARD OF INDIA

WTMO/2/CFD/4/04 1.0 ORG Informatics Ltd. (hereinafter referred to as “the target company”) proposes to issue 30,66,217 equity shares of Rs. 10/- each representing 27.92% of the enhanced equity capital to Global Asia Partners LP (hereinafter referred to as “the acquirer”). The acquirer is stated to hold 14.9% of equity shares of the total capital of the target company. The shares of the target company are listed at Vadodara Stock Exchange, Delhi Stock Exchange, Ahmedabad Stock Exchange and the Stock Exchange Mumbai. As the proposed acquisition will result in the increase of shareholding of the acquirer in the target company from 14.9% to 38.66% the acquirer has filed an application dated January 24, 2004 to the Securities and Exchange Board of India (hereinafter referred to as “SEBI”) seeking exemption from complying with the provisions of Chapter III of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "the said Regulations"). 2.0 In the application, it is submitted that the financial position of the target company is very weak. The networth of the company has been eroded more than 50% during last four financial years preceding the financial year ended on 31.3.2003. The target company is not in a position to repay the loan of USD 65,55,500 taken from the acquirer and the said loan along with the accrued interest comes to Rs. 3,06,62,170/-. The main objective of allotting shares to the acquirer is to infuse additional capitali

The Acquirer is already working as Joint Controller of the target Company and the conversion of loan alongwith interest payable to the Acquirer into equity would not result into change in control or management of the target Company. In the facts and circumstances, grant of exemption as sought would be in the interest of the shareholders, employees and creditors of the target company since the objective appears to revive the potential sick company by additional capitalization by converting the loan of the Acquirer. Subject to the target company passing requisite resolution as per section – 81 (1A) of the Companies Act, 1956 and complying with all procedural formalities in connection therewith, the grant of exemption as sought is recommended.” 4.0 I have taken into consideration the application dated January 24, 2004 the material available on record and the recommendations of the Takeover Panel. 4.1 It is noted that an amount of Rs. 3,06,62,170/- is payable by the target company to the acquirer on account of the loan availed from the acquirer along with the interest accrued thereon. In respect of the said amount the target company proposes to issue 30,66,217 equity shares to the acquirer by way of conversion of the loan amount. 4.2 It is noted that the objective for conversion of the said loan amount into equity shares is to revive the target company by additional capitalization. 4.3 It is noted that the acquirer is presently holding 11,79,450 shares representing 14.9% of the s

Source: SecMarx — sebi:WTMO/2/CFD/4/04. 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.