TEXT OF MY LETTER TO SEBI & OTHERS
The above Offer has been cleared without considering the points raised by me in my earlier letter dated January 5, 2011, especially suggesting that the Preference shareholders be offered an opportunity to tender their shares in the Open Offer. This leads to grave consequences as follows:
1. On the Preference shares Dividend has not been paid for last more than 5-10 years. As a result these Preference shareholders have become at par , if not superior, to the Equity shareholders and have equal voting rights, u/s 87(2) (b) of the Companies Act 1956. However this has been ignored while calling the EGM on January 18, 2011for preferential allotment of shares to the Acquirers. As such, this meeting cannot be taken as properly convened and the actions taken therein are ultra vires. The allotment of shares to the acquires is Null & Void.
2. There are a total of Rs 1003 Crs. Worth of outstanding Preference shares in different series. Accordingly they are entitled to 100 cr. Votes. These 100 Cr. Votes amount to 43.5 % of the total voting capital before the Preferential allot. They cannot be ignored.
3. “Fully Diluted Equity Share Capital” has been wrongly calculated taking the conversion of 48,59,844 nos 0.01% Preference shares into consideration instead of taking 48.59 crs. They have taken into consideration only 24.48 Crs.
4. Further other Preference shareholders for Rs 517.98 have been ignored completely.
5. “Fully Diluted Equity Share Capital” should increase by 75.8 crs. And accordingly The Open offer size should increase by 15.16 crs. No. of shares. ( all the Preference shares have been taken at a uniform face value of Rs 10 although they are of different denomination)
You are requested to examine the above issues in depth and issue proper directions to the Acquirers, the Target Company and all concerned to:
a) Not to proceed with the present Open offer
b) Treat the Preferential allotment to the Acquirers as Null & Void
c) Offer the opportunity to the Preference shareholders to tender their shares in the Open offer.
d) Direct the Acquirers to give interest for the period of delay.
e) Increase the size of the offer to the correct number of shares.
f) Direct the Target company to complete the process of conversion of Preference share immediately, no action has been taken in this regard for the last 3-4 months.