PROPOSED ACQUISITION OF SHARES OF DELCO REMY ELECTRICALS INDIA LIMITED Vs. STATE
SECURITIES APPELLATE TRIBUNAL
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(1.) MR Bhupinder Singh Sahney & M/s Delco Remy America Inc.(hereinafter collectively referred to as the "Acquirers") along with MRs Brijween Kaur Sahney, MRs Jasmine Sahney Pillay, MRs Anjana Sahaney Thakker, Ms Ambita Kaur Sahney, Ms Deepika Kaur Sahney, M/s Bhupinder Investment Company Pvt, Ltd. M/s Delco Remy Korea Inc. & M/s Remy India Holdings Inc. (hereinafter referred to as the "persons acting in concert" ) intend to make an offer to buy out the outstanding shares aggregating to 1.82% of the total share capital of the Delco Remy Electricals India Limited(hereinafter referred to as the "Target company") remaining with the public shareholders. The shares of the Target company are listed at Mumbai & Hyderabad Stock Exchange.
(2.) The Acquirers made an application dated 27.11.02 to the Securities and Exchange Board of India (hereinafter referred to as SEBI) under sub-regulation (2) of Regulation 4 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "Regulations") seeking exemption from making a Public Announcement and other formalities of open offer in terms of Regulation 11(2) to acquire 1.82 % of the total share capital of Target company.
At this juncture it is necessary to deal with the background of the matter as follows:
3.1 The Acquirers had made their earlier application dt. 16.02.02 (hereinafter referred to as "First Application") to SEBI under sub-regulation (2) of Regulation 4 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "Regulations") seeking exemption from making a Public Announcement and other formalities of open offer in terms of Regulation 11(2) to acquire to acquire the share in question of the target company.
3.2 In the aforesaid application, the Acquirers submitted, inter-alia, the following:
a. The promoters group of the Target company including the Acquirers presently hold 98.18% of the total share capital of the Target company and public shareholding is 1.82% of the share capital of the Target company.
b. The Target company has only 350 shareholders in the 'public' category holding 68,450 shares.
c. The acquisition price to be paid is Rs. 44.15 per share.
d. The control of the Target company already vests with the promoters and the proposed acquisition is to enhance the stake of the promoters to 100%.
e. The public shareholders being only 350 in number, the Acquirers shall make the offer for buying directly to each of such shareholder by way of individual letters .
3.3 The said application dated February 16, 2002 was forwarded to the Takeover Panel in terms of sub-regulation(4) of Regulation 4 of the Regulations. The Takeover Panel vide its report dated March 11, 2002 while mentioning the requirements to be complied with by the acquirers recommended for granting the exemption to the acquirer.
3.4 Taking into consideration the facts and circumstances of the case and also the recommendations of the Takeover Panel and the interest of investors, in exercise of the powers conferred upon me under Section 4(3) of the Securities and Exchange Board of India Act 1992 read with Regulation 4(6) of the Regulations, vide my order dt. 17.04.02, the acquirers were granted exemption from complying with the procedure laid down in Chapter III of the Regulations in respect of the proposed offer to acquire 1.82% shares of the Target company at Rs 44.15 /- from public shareholders. The acquirers were directed to make individual offer to the balance public shareholders and to complete the proposed offer within three months from the date of the Order.
3.5 However, instead of the complying with the said order dt. 17.04.02 the acquirers requested for extension of time on the ground that the FIPB approval for acquisition of shares by one of the acquirers viz. Delco Remy America was not received. Though it was noted that application to FIPB was made by the acquirer after 3 months from the SEBI Order dated 17.4.2002, in the interest of the investors, while advising the acquirers to be careful in future, SEBI vide its letter dated 13.8.2002, granted extension upto 17.10.2002 for completing the proposed acquisition in terms of the Order dated 17.4.2002. The acquirers were further advised to note that no request for further extension if any, would be considered.
3.6 The acquirers however, could not complete the acquisition even under the extended period i.e. by 17.10.2002 as FIPB approval was not received. The acquirers once again requested for further extension of two months. As it was not possible to grant further extension, the acquirers were advised on 28.10.2002 to consider making a fresh application if they wish to acquire 1.82%.
3.7 The FIPB granted permission on 28.10.2002. Pursuant to such approval of FIPB, the acquirers filed the present application (hereinafter referred to as "Second Application") again seeking exemption from making Public Announcement for the proposed acquisition of 1.82% in terms of Regulation 11(2). In the said application it was submitted, inter-alia, that the public shareholders being only 350 in number, the Acquirers may be allowed to make the offer for buying directly to each of such shareholder by way of individual letters .
(3.) THIS second application was also referred to the Takeover Panel which after consideration, while mentioning certain conditions to be complied with by the acquirers, vide its report dated 12.12.02 recommended the grant of exemption to the acquirers.;
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