Sub.
Polo Hotels Ltd. – Open Offer Not announced.
Ref. Their letter dated January
24,2017 addressed to the Chairman SEBI CC to me
I have sent several letters/mails to the Acquirers & the
Company- POLO Hotels Ltd. Many have remained unanswered even after the above
referred letter. I have tried to compile them at one place for better
monitoring of the response.
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NO.
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MY ALLEGATION
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RESPONSE
FROM POLO HOTELS AND THE ACQUIRER
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1.
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Partial or no reply received for my
letters:
a. a. 18th February 2016
b. b. 27th July 2016
c. c. 21st December 2016
d. 11th January 2017
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Almost after one year,
for the first time they have
responded with their letter dated 24th January 2017. This letter
does not answer all the points.
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2.
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Balance sheet for the year ended
31.3.16 and notices not received by me.
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No specific confirmation or proof
of having sent such notices and Balance Sheet to me has been given although
general Certificates from the registrar and Co. secretary have been
submitted.
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3.
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The
promoters have violated the Takeover code
as it existed earlier i.e. SAST 1997. Till the time they have
completed their obligation under SAST 1997, for the Open offer triggered on
1.4.99 the “Offer Period” is supposed to continue and the SAST casts several
obligations on the Acquirers as well as the target company during this
period.
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No
response or confirmation that all the obligations cast upon the acquirers and
the target company have been observed.
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4.
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The
promoters have been selling their
Shares in all quarters since Sept. 2015.
Their
shareholding came down to 49.29% from 75. %.
In
Nov. 2016 new shares amounting to 133%
of their existing holding, through CCPS were allotted to the Promoters. As
against their holding of 66,46,874 shares they were allotted88,88,889/-
shares.
As per the
Shareholding pattern for Dec.2016, filed with BSE Promoter’s holding came
down further to just 57,25,839, thus the new shares allotted to them is 155%
of their pre allotment holding.
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No
reply has been offered on why the promoters were first continuously selling
the shares and subsequently why they got allotted new shares amounting to about 133% or 155% of their pre-allotment
holding.
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5.
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The Preferential allotment of
shares happened in quite a weird manner.
The
resolution very clearly declared that the company does not have any resources
to repay the loan or even the interest. The only option was to issue equity.
Then why borrow as loan?
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No
response
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6.
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Why
the sham of INTEREST FREE UNSECURED LOAN to be converted into CCPS , then
again CCPS to be converted into equity? Why not straight equity?
a. On 26th September 2016 the relevant resolution was captioned—“TO
APPROVE BORROWING OF INTEREST FREE UNSECURED LOAN FROM PROMOTERS CONVERTIBLE
INTO EQUITY SHARES “ is passed.
b. On 14th November 2016 CCPS is allotted.
c. On 9th December 2016 CCPS is converted-i.e. in
less than a month.
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No
response
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7.
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The ploy of INTEREST FREE
UNSECURED LOAN is used for round tripping of funds. The promoters did not
actually give 10 Crs.
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No denial of round tripping.
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8.
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The
fresh Acquisition of more than 5% has triggered yet another Open offer on 26th
September 2016 since the promoter’s holding more than doubled. It went up to
155.35 Lakhs shares from their earlier holding of just 66.46 Lakhs shares.
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They
are playing with dates. They have stated that more than 5% shares were not acquired
on 26th September 2016. It was never alleged that they have acquired shares on this
date. They triggered Open offer on this date because they agreed to acquire
on that date.
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9.
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This is a very old case pending since 1999. No justice is being given
to the investors although in the 16-17 years the case has travelled all possible level and stages of
Justice delivery system - SEBI, Punjab
& Haryana High Court, SEBI Takeover panel, SEBI Chairman, SAT and Supreme
Court. The acquirer has lost
everywhere yet rather than fulfilling his legal obligations, it seems they
are indulging in some wrong doing. Even when their review petition was
rejected, they have again gone to Hon’ble Supreme Court with a CURATIVE
PETITION.
In the recent past Hon’ble Supreme
Court,has come down heavily on some litigants-
a bench headed by Justice J Chalameswar imposed a heavy fine of about Rs.75
Lakhs ( Rs.25 lakhs each) on a German
company- Messer Griesham GmbH(MCG), Goyal Gases Ltd. And Bombay Oxygen
Corporation Ltd. For abuse of Judicial
process.
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No response
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10.
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Open
Offer has been triggered for the second time on 26th September
2016
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The
reply given is bizarre. They have stated that :
a. the
promoters were holding 67.54% of the total paid up capital as on March 31,
2016 and with this allotment the promoters shareholding rose to 69.44% i.e.
less than 2%. Hence, this much increase in shareholding cannot be alleged to
in violation of any provision of SAST Regulations.
b. as
per Explanation (i) to Regulation 3 (2) of SAST Regulations, gross
acquisitions alone shall be taken into account and our gross acquisition was
around 1.90% since 31st March, 2016.
c.
Hence, none of the provisions of SAST Regulations has been violated and we
are of the opinion that no open offer has been triggered. Hence, there is no
need for open offer announcement.
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I would request SEBI to examine the
whole matter very thoroughly. Point wise my counter reply or request to SEBI to
obtain the following answers:
1.
Why
the company holds the investors with
such contempt? Why they took almost a year and intervention of your good office
to obtain a reply?
2.
Why
specific confirmation is not given, if they have sent the Balance sheet and
notices to me?
3.
Why
no specific confirmation that all the obligations cast during the “ Offer
Period” which is still continuing, have been observed?
4.
Why
promoters have been continuously first selling their sharesand then more than
150% shares are allotted to them?
5.
When
it is an admitted fact that the company did not have resources to repay any
loan or even interest (The resolution very clearly declared that the company
does not have any resources to repay the loan or even the interest.), then why
they borrowed.
6.
Why
the sham of INTEREST FREE UNSECURED LOAN to be converted into CCPS. Then again
CCPS to be converted into equity? All these immediately one after the other
within 3 months.
7.
No
round tripping of funds should be allowed. The company’s Bank statement and a
declaration for end use of funds must be obtained. The funds taken by the
company must be used for that specific purpose and not be misused.
8.
When
the second Open Offer was triggered? In my view it got triggered on 26th
September 2016, when the resolution was passed and the promoters agreed to
subscribe to the Compulsory Convertible
Preference Shares
(CCPS).
9.
On
a deeper study of the changes in promoter’s holding, it is observed that the
Open Offer has been triggered on multiple times in addition to allotment of new
shares. On 6th December
2016, their total acquisition of shares during the FY 2016-17 totalled 10,67,662 i.e. 7.92% much beyond the
permitted 5%. They further acquired 3 lakhs shares on 3rd January
2017 making their total acquisition through purchases 13,67,662 or 10.14%.
10. Why the company is indulging in
abuse of the process of law as was observed
by the Hon’ble Supreme Court. The matter is being dragged on for about
18 years!
11. The Acquirers / Company are giving bizarre
explanations. They are insulting the basic intelligence of everyone.
a.
They
are manipulating facts and rather than
saying what was their Pre- allotment holding, they are referring to their
holding as on 31st March 2016 to conclude that their holding has
increased by less then 2%. The fact is
their holding increased from 57,25,839 (42.46%) to 146,14,728 (59.84%) or by 17.38%
.
b.
They
are quoting –“as per Explanation (i) to Regulation 3 (2) of SAST Regulations,
gross acquisitions alone shall be taken into account and our gross acquisition was
around 1.90% since 31st March, 2016.”
However the fact is as per the
regulations the difference between pre-allotment and post –allotment percentage
is to be taken as acquisition. The regulation 3(2)(ii) of SAST 2011 is
reproduced below:
“in the case of acquisition of shares
by way of issue of new shares by the target company or where the target company
has made an issue of new shares in any given financial year, the difference
between the pre-allotment and the post-allotment percentage voting rights shall
be regarded as the quantum of additional acquisition .”
I humbly submit that from the conduct and tone and tenor of
the reply it is quite clear that promoters are very mischievous and will have
to be dealt with very firmly. Their voting rights should be frozen and a
detailed investigation should be initiated in their conduct of the affairs of
the company.
Your
immediate strong action against them and also an appeal in the Hon’ble Supreme
Court in their Curative petition, to dismiss the case with exemplary fine will
be highly appreciated.
Sub. Second Open Offer triggered for
Polo Hotels Ltd. But not announced
Further to my
earlier letters dated 18th February 2016, 27th July 2016
and 21st December 2016 I regret to state that the offender has utter
disregard for the rules and regulations and continues flouting them every time.
While the implementation of their earlier Open Offer triggered on 1st
April 1999 is still pending in spite of the order of Hon’ble Supreme Court,
they have triggered Open Offer once again and this time again, they have not
come out with Open Offer. Kindly note as
follows:
The
Preferential allotment to promoters is highly irregular. Some points to be
noted are:
1.
The
promoters have been selling their Shares
in the company. They kept on selling their shares in all quarters since Sept.
2015. Their shareholding came down to 49.29% from 75. %. In Nov. 2016 they
allotted themselves new shares amounting
to 133% of their existing holding, through
CCPS. As against their holding of 66,46,874 shares they allot 88,88,889/-
shares to themselves.
2.
Promoters
have been trading in their own shares very heavily, and have been selling them.
|
Quarter Ended
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Promoter Holding Nos.
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Promoter
Percentage
|
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Sep-15
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101,15,967
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75.01%
|
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Dec-15
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93,11,566
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69.05%
|
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Mar-16
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91,08,408
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67.54%
|
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Jun-16
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82,47,008
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61.16%
|
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Sep-16
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66,46,874
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49.29%
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New allotment
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88,88,889
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|
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Total
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155,35,763
|
|
|
|
|
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Nov-16
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155,35,763
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69.44%
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3.
The
Preferential allotment of shares happened in quite a weird manner.
a.
The
resolution very clearly declared that the company does not have any resources
to repay the loan or even the interest. The only option was to issue equity.
Then why the sham of INTEREST FREE
UNSECURED LOAN to be converted into CCPS, for this purpose the Memorandum
and Articles of Association had to be altered to reclassify the
Capital, The CCPS will again be
converted into equity? Why not straight equity?
b.
On
26th September 2016 the
relevant resolution was captioned—“TO
APPROVE BORROWING OF INTEREST FREE UNSECURED LOAN FROM PROMOTERS CONVERTIBLE
INTO EQUITY SHARES“
is passed.
c.
On
14th November 2016 CCPS is allotted.
d.
On
9th December 2016 CCPS is converted-i.e. in less than a month.
The caption INTEREST
FREE UNSECURED LOAN FROM PROMOTERS gave an impression of most magnanimous attitude of the
promoters who will lend money to the company free of interest. But quite contrary to this “INTEREST FREE UNSECURED LOAN” was just a ploy for round tripping
the money. As we are aware, in case of issue of fresh securities, the company
will have to open a special bank account and the money cannot be touched till
such time the issue is completed. To circumvent this provision, the ploy ofINTEREST FREE UNSECURED LOAN is used. The same money did round tripping
and came back from the account of the promoters
to help them make it to Rs.10 Crores. This is quite obvious and the
wording in the resolution gives it away very clearly-—“ to be procured in one or more
tranches”
4.
The
fresh Acquisition of more than 5% has triggered yet another Open offer on 26th
September 2016 since the promoter’s holding more than doubled. It went up to
155.35 Lakhs shares from their earlier holding of just 66.46 Lakhs shares.
You are requested to examine the matter in detail and
enforce the implementation of the law, rules and regulations and to protect the
interest of the investors.
