GENERAL MANAGER
DIVISION OF CORPORATE RESTRUCTURING
Tel. 22823886
Fax – 22829520
Email–id - mdrao@sebi.gov.in
CFD/DCR/DLT/21594/04
September 23, 2004
SBI Capital Markets Ltd
202, Maker Tower ‘E’
Cuffe Parade,
Mumbai – 400 005
Dear Sir,
Sub.: Request for an interpretive letter under the SEBI (Informal Guidance) Scheme, 2003 and Securities and Exchange Board of India (Delisting of Securities) Guidelines – 2003 – regarding M/s Amalgamations Repco Ltd.
This has reference to your letter dated June 16, 2004 on the above mentioned subject seeking “interpretive letter” under the SEBI (Informal Guidance) Scheme, 2003.
You had represented that M/s Simpson & Co. Ltd. (the acquirer), holds 78% of the equity share capital of M/s Amalgamations Repco Ltd. (the target company) and intends to acquire all outstanding shares of the company and delist them from MSE where the target company is currently listed. You had also represented that at the time company was initially listed (IPO), it was required to make a minimum public offering of 25%, and accordingly it has to maintain a minimum level of non-promoter holding at 25% under clause 40A(i) of the Lising Agreement.
You had referred to clause 8.8 and clause 12 of the SEBI (Delisting of Securities) Guidelines, 2003. These clauses inter- alia deal with the success of the book building process. Clause 8.8 states that - “If the quantity eligible for acquiring securities at the final price offered does not result in public shareholding falling below the required level of public holding for continuous listing, the company shall remain listed.” Clause 12 states that – “Where the offer for delisting results in acceptance of fewer number of shares outstanding and as a consequence, the public shareholding does not fall below the minimum limit specified by the listing conditions or the listing agreement, the offer shall considered to have failed and no securities shall be acquired pursuant to such offer.” In the context of these clauses, since in the instant case, the non-promoter holding has already gone below the required 25%, you had sought a clarification on what would be the applicable threshold limit for the proposed acquisition in order to get the shares delisted.
Our views on the issue are as under:
In the peculiar facts of your case and in view of your intention to delist the shares, we advise that the Delisting Guidelines will become applicable in your case and the offer would succeed on the acceptance of the discovered price based on the book building process prescribed in the Guidelines. Further, if in the proposed offer, no bids are preferred then it may be presumed that the offer has failed and no shares may be acquired pursuant to this offer and the public shareholding may be increased to comply with the continuous listing requirement by any of the ways mentioned under clause 9.3 of the guidelines.
This interpretation is based on the representation made to the Division in your letter quoted above. Different facts or conditions might require a different result. This letter does not express decision of the Board on the questions referred in your letter.
Yours faithfully,
S.V.MURALI DHAR RAO