TEXT OF THE LETTER WRITTEN TO SEBI & ORS.
The unanswered questions-- Corrigendum dated 23 August,2010 –Open offer of Zenotech Laboratories Limited.
It seems that with an idea to scare Dr. Jayaram Chigurupati into submission, in the above corrigendum it has been written in Bold & In Caps under the Title IMPORTANT INFORMATION that The acquirer do not intend to acquire any share outside the offer or to come out with a follow on offer or a delisting offer etc.
What is required to be stated has not been stated, but the Acquirer & Merchant Bankers have otherwise gone much beyond in making a futuristic statement.
On the lighter side, it reminds me of the popular Hindi Film-ARADHANA & a song in the film wherein the heroine says “MAIN SAB KAHUNGI LEKIN WOH NAA KAHUNGI JISKA TUMKO INTAJAAR HAI…” (I will say everything but not what you are waiting for)
It is difficult to understand why are they shying away from making a simple admission of a mistake that although it has been stated in The letter of Offer (LOO) dated July 26, 2010, that Dr. Jayaram Chigurupati can tender the shares, actually he cannot tender them in view of the CLB order dated August 3, 2010 and that even if he tenders in violation of the said order it will not be considered in terms of Letters of Offer (13 December 2007 & 26 July 2010) .
I have tried my best to get the mistake corrected but failed till now. I hope at least SEBI will not allow them to consider any shares tendered by the old promoter in contravention of CLB order and terms of Letters of Offer (13 December 2007 & 26 July 2010)
You may take whatever action you may deem proper.
About Me
- CA. Arun Goenka
- The Original CHAUKIDAAR ,“TAKEOVER WATCHMAN” since 2007. CA. Arun Goenka* hands-on experience in the share market* deep knowledge of laws and account*one of the early players, pioneered an investment strategy in TAKEOVERS*The WIRC - of The Institute of Chartered Accountants of India, has honoured him with the ‘Recognition of CAs in Social Service’. * often invited by National business news; electronic and print media, for his views on SEBI related matters. * history of red-flagging 100+ cases to SEBI* contributes by giving inputs in drafting amendments to the regulation* Some of the suggestions reflected in subsequent regulatory changes: (a). In takeover of Cairn 3,750 Crores non-compete fees waived off and ultimately Removal of Non-compete fee in 2011 (b) November 2009 amending Regulation 11 (1). (c)Listing agreement baring promoters from voting on related party. (d) Disclosure of past performance by merchant bankers in case of IPO (e) SAST 2011 regulation 10(1)(h), (f) Counter Offer in case of Delisting (g) Interest payment to all in case of delays in Open Offers(05.06.20).
Thursday, August 26, 2010
Thursday, July 22, 2010
MY SUGGESTIONS ACCEPTED-SAST
Some of my most significant suggestions to the SEBI committee for the review of Takeover Regulations were accepted.
SEBI had notified minimal changes in the Code –only 4. Vide notification dated November 06, 2009,
The amendment in Regulation 11 (1) is as per my suggestion.
Similarly I believe I was the first proponent of disallowing Non Compete fees. In the new draft My suggestion for disallowing Non-compete fees has been accepted.
Yet I am not happy because one of my main points – defining control & company so as to bring into the net asset sale route—Piramal, Gwalior chemicals, Orchid chemicals, Eicher motors, Zicom etc. involving G 1000+ Crs. has not been taken care of. I have brought this to the notice of SEBI time & again. I call it “THE BYPASS ROUTE TO SEBI TAKEOVER CODE”
I aired my feelings in an interview with NDTV.
You may simply click the link below to watch the interview which took place on 20 July 2010.
http://www.ndtv.com/news/videos/video_player.php?id=153390
The Businessline ( 21 July 2010) in its editorial also pointed this out as one of the three critical failures of TRAC.
SEBI had notified minimal changes in the Code –only 4. Vide notification dated November 06, 2009,
The amendment in Regulation 11 (1) is as per my suggestion.
Similarly I believe I was the first proponent of disallowing Non Compete fees. In the new draft My suggestion for disallowing Non-compete fees has been accepted.
Yet I am not happy because one of my main points – defining control & company so as to bring into the net asset sale route—Piramal, Gwalior chemicals, Orchid chemicals, Eicher motors, Zicom etc. involving G 1000+ Crs. has not been taken care of. I have brought this to the notice of SEBI time & again. I call it “THE BYPASS ROUTE TO SEBI TAKEOVER CODE”
I aired my feelings in an interview with NDTV.
You may simply click the link below to watch the interview which took place on 20 July 2010.
http://www.ndtv.com/news/videos/video_player.php?id=153390
The Businessline ( 21 July 2010) in its editorial also pointed this out as one of the three critical failures of TRAC.
GOLDEN TOBACCO
Ref. Open Offer of Golden Tobacco Ltd.
The above referred Open offer is now pending for a long time. The date of PA is 12th Nov 2009.
I wish to bring the following to your notice for further examination & necessary action for early completion/disposal of the Offer:
1. The offer is made by Mr Promod Jain and Pranidhi Holdings Pvt Ltd. Who hold 1,000 & 48,002 shares respectively, they had acquired 71,034 shares but have sold 22,032 shares (Ref: Para 1.3 of PA). The activity is trading in nature & not that of a person with serous intent to acquire.
2. PAC- JP Financial Services Pvt Ltd holds 10.9 lac shares together the acquirer and PAC hold 11.39 Lac shares or 6.47% of the equity of the target company.
3. Pramod Jain whose educational qualification is not given but his age and experience is given as 43 years and 25 years of experience in financial consultancy service. It will be interesting to find what kind of financial consultancy he was giving at the age of 18 and who were his clients.
4. Pranidhi holding although reporting losses have substantial amount as reserves. How was this reserve built up is a point to be examined. In case the reserve was built up from share premium account, who are their subscribers/share holders to take share at such hefty premium for a company who is reporting losses.
5. JP Financial is the major holder but it is not the main acquirer, it is acting only as a PAC. Why the prominent player is assuming a secondary role?
6. The objective for the offer is stated to be “ in the nature of strategic investment for diversification and growth and to reap the benefits of corporate opportunities” (Para 4.3)
7. Pranidhi holding is currently engaged in activities of investment in shares and securities and real estate projects.
8. JP Financial is engaged in engaged in activities of investment in shares and securities and providing loans and advances. JPFSPL is registered with RBI as an NBFC having Reg No: 0501828
9. It will be interesting to find whether these finance and investment companies have changed their object clause to start industrial activity for manufacturing of cigarettes.
10. Has JP Finance Informed RBI about its proposed Diversification and obtained its consent?
11. PAC has pledged 10Lac shares of Techno electric (clause 7.3) however there is not sufficient liquidity in these shares and the net worth of the acquirer is 151.25 lacs only.
12. The PAC – JP Financial not only holds More than 20 Times the number of shares held by the acquirer they have also almost entirely made the financial arrangement for the open offer. Why are they playing second fiddle as PAC rather than as an acquirer?
13. The Acquirers have time and again displayed that they are not seriously interested in the Open offer or the takeover of the company. They have resorted to this tactic for some other reason. The PA originally announced on 12 Nov 2009 has not been acted upon or pursed vigorously. From some media interview it is clear that the Open offer has been announced just to put some pressure on the management in order to settle some other score.
In the light of the above you are requested to please investigate the matter and ask the Acquirer to pursue the Open offer in an honest manner and conclude it at the earliest and in case you find that there is lack of seriousness or the actual purpose of the offer is other than what has been stated, you may ask the acquirer to withdraw the Open offer. Another significant point to be noted is that the market price of share is constantly higher than the offer price of Rs. 101/- and the Acquirers presently hold only 6.47% shares with no hope of getting any shares in the Open offer.
CC
VC CORPORATE ADVISORS PRIVATE LIMITED
SEBI Registration No. INM000011096
(Contact Person: Mr. Anup Kumar Sharma)
31, Ganesh Chandra Avenue, 2nd Floor,
Suite No –2C, Kolkata – 700 013, Ph: (033) 2225-3940/ 3941/ 4116
The above referred Open offer is now pending for a long time. The date of PA is 12th Nov 2009.
I wish to bring the following to your notice for further examination & necessary action for early completion/disposal of the Offer:
1. The offer is made by Mr Promod Jain and Pranidhi Holdings Pvt Ltd. Who hold 1,000 & 48,002 shares respectively, they had acquired 71,034 shares but have sold 22,032 shares (Ref: Para 1.3 of PA). The activity is trading in nature & not that of a person with serous intent to acquire.
2. PAC- JP Financial Services Pvt Ltd holds 10.9 lac shares together the acquirer and PAC hold 11.39 Lac shares or 6.47% of the equity of the target company.
3. Pramod Jain whose educational qualification is not given but his age and experience is given as 43 years and 25 years of experience in financial consultancy service. It will be interesting to find what kind of financial consultancy he was giving at the age of 18 and who were his clients.
4. Pranidhi holding although reporting losses have substantial amount as reserves. How was this reserve built up is a point to be examined. In case the reserve was built up from share premium account, who are their subscribers/share holders to take share at such hefty premium for a company who is reporting losses.
5. JP Financial is the major holder but it is not the main acquirer, it is acting only as a PAC. Why the prominent player is assuming a secondary role?
6. The objective for the offer is stated to be “ in the nature of strategic investment for diversification and growth and to reap the benefits of corporate opportunities” (Para 4.3)
7. Pranidhi holding is currently engaged in activities of investment in shares and securities and real estate projects.
8. JP Financial is engaged in engaged in activities of investment in shares and securities and providing loans and advances. JPFSPL is registered with RBI as an NBFC having Reg No: 0501828
9. It will be interesting to find whether these finance and investment companies have changed their object clause to start industrial activity for manufacturing of cigarettes.
10. Has JP Finance Informed RBI about its proposed Diversification and obtained its consent?
11. PAC has pledged 10Lac shares of Techno electric (clause 7.3) however there is not sufficient liquidity in these shares and the net worth of the acquirer is 151.25 lacs only.
12. The PAC – JP Financial not only holds More than 20 Times the number of shares held by the acquirer they have also almost entirely made the financial arrangement for the open offer. Why are they playing second fiddle as PAC rather than as an acquirer?
13. The Acquirers have time and again displayed that they are not seriously interested in the Open offer or the takeover of the company. They have resorted to this tactic for some other reason. The PA originally announced on 12 Nov 2009 has not been acted upon or pursed vigorously. From some media interview it is clear that the Open offer has been announced just to put some pressure on the management in order to settle some other score.
In the light of the above you are requested to please investigate the matter and ask the Acquirer to pursue the Open offer in an honest manner and conclude it at the earliest and in case you find that there is lack of seriousness or the actual purpose of the offer is other than what has been stated, you may ask the acquirer to withdraw the Open offer. Another significant point to be noted is that the market price of share is constantly higher than the offer price of Rs. 101/- and the Acquirers presently hold only 6.47% shares with no hope of getting any shares in the Open offer.
CC
VC CORPORATE ADVISORS PRIVATE LIMITED
SEBI Registration No. INM000011096
(Contact Person: Mr. Anup Kumar Sharma)
31, Ganesh Chandra Avenue, 2nd Floor,
Suite No –2C, Kolkata – 700 013, Ph: (033) 2225-3940/ 3941/ 4116
SPICE JET
Lptp/MYDOC/takeover/spicejet
21 June 2010
To,
Shri C.B. Bhave,
The Chairman
SEBI
SEBI Bhavan, 3rd Floor, B Wing,
Plot No. C-4A, G Block
Bandra Kurla Complex
Mumbai: 400051
Dear Sir,
Ref. Open Offer of Spice Jet Ltd.
The PA of Spice Jet Open offer is an dishonest attempt to make believe full compliance of regulations while circumventing it .
1) An illegal attempt has been made to save the foreign entity(WLR) from its legal obligation.
It is an acknowledged fact that WLR has triggered Open offer upon conversion of warrants. The PA clause 2 mentions that it is a mandatory Offer. However legal obligations of 2 separate & distinct entities have been clubbed together to This certainly cannot be allowed.
Legal obligations cannot be compromised.
Legal obligation is not a transferable commodity --WLR’s obligation cannot be passed on to Kal Airways Private Limited. & Mr. Maran
2 different & distinct legal obligations cannot be merged . They have been triggered on
o 2 different dates
o By 2 different transactions
o against 2 different persons.
o Under 2 different regulations- as per PA by the Acquirers under
regulations 10 and 12 by PAC regulation 10
2) WLR has been illegally termed as Person Acting in Concert (PAC). Regulation 2(1)(e)(1) is quoted as below:
(e) "person acting in concert" comprises, -
(1) persons who, for a common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding (formal or informal),directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company.
The definition of Person Acting in Concert given in Regulation 2(1)(e)(i) does not fit WLR who is not acting “for a common objective or purpose of substantial acquisition of share or voting rights or gaining control over the target company” as stipulated in the regulation. Rather WLR’s objectives are just the reverse. WLR is selling and Mr. Maran & his co. are buying voting rights/control in the target company. The objective of a buyer & a seller are just the reverse of each other and by no stretch of imagination can be said to be same. WLR as such can not become Person Acting in Concert of the acquirer.
WLR, the so called PAC is not acquiring the shares, it is only the Acquirer i.e. Maran & co. who are acquiring the shares and have made all the financial arrangements.
The main objects of the Acquirer & PAC are also different. While The uundateAcquirers objective has been given as aviation services, that of PAC is Investment.
3) The undated document
PA clause 1.8 (ii) states “RHSL shall deliver or cause to be delivered to the RHSL depository participant , duly executed original undated,….(emphasis supplied). A document cannot be duly executed if it has not been dated. Moreover this practice of undated documents is highly deplorable and unethical if not illegal and should not find place in such agreements.
In the light of the above you are requested to please examine the matter in full detail and if thought fit,
a) Direct WLR to come out with an independent Open offer
b) Direct The Acquirers to remove the name of WLR as PAC
c) Direct The Acquirers to properly execute all the documents and undated executed documents should not find any place
Thanking you,
Yours truly,
Arun Goenka
21 June 2010
To,
Shri C.B. Bhave,
The Chairman
SEBI
SEBI Bhavan, 3rd Floor, B Wing,
Plot No. C-4A, G Block
Bandra Kurla Complex
Mumbai: 400051
Dear Sir,
Ref. Open Offer of Spice Jet Ltd.
The PA of Spice Jet Open offer is an dishonest attempt to make believe full compliance of regulations while circumventing it .
1) An illegal attempt has been made to save the foreign entity(WLR) from its legal obligation.
It is an acknowledged fact that WLR has triggered Open offer upon conversion of warrants. The PA clause 2 mentions that it is a mandatory Offer. However legal obligations of 2 separate & distinct entities have been clubbed together to This certainly cannot be allowed.
Legal obligations cannot be compromised.
Legal obligation is not a transferable commodity --WLR’s obligation cannot be passed on to Kal Airways Private Limited. & Mr. Maran
2 different & distinct legal obligations cannot be merged . They have been triggered on
o 2 different dates
o By 2 different transactions
o against 2 different persons.
o Under 2 different regulations- as per PA by the Acquirers under
regulations 10 and 12 by PAC regulation 10
2) WLR has been illegally termed as Person Acting in Concert (PAC). Regulation 2(1)(e)(1) is quoted as below:
(e) "person acting in concert" comprises, -
(1) persons who, for a common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding (formal or informal),directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company.
The definition of Person Acting in Concert given in Regulation 2(1)(e)(i) does not fit WLR who is not acting “for a common objective or purpose of substantial acquisition of share or voting rights or gaining control over the target company” as stipulated in the regulation. Rather WLR’s objectives are just the reverse. WLR is selling and Mr. Maran & his co. are buying voting rights/control in the target company. The objective of a buyer & a seller are just the reverse of each other and by no stretch of imagination can be said to be same. WLR as such can not become Person Acting in Concert of the acquirer.
WLR, the so called PAC is not acquiring the shares, it is only the Acquirer i.e. Maran & co. who are acquiring the shares and have made all the financial arrangements.
The main objects of the Acquirer & PAC are also different. While The uundateAcquirers objective has been given as aviation services, that of PAC is Investment.
3) The undated document
PA clause 1.8 (ii) states “RHSL shall deliver or cause to be delivered to the RHSL depository participant , duly executed original undated,….(emphasis supplied). A document cannot be duly executed if it has not been dated. Moreover this practice of undated documents is highly deplorable and unethical if not illegal and should not find place in such agreements.
In the light of the above you are requested to please examine the matter in full detail and if thought fit,
a) Direct WLR to come out with an independent Open offer
b) Direct The Acquirers to remove the name of WLR as PAC
c) Direct The Acquirers to properly execute all the documents and undated executed documents should not find any place
Thanking you,
Yours truly,
Arun Goenka
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