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| Reliance never made us a written offer, says Fame |
| Aminah Sheikh & Pradipta Mukherjee / Mumbai/Kolkata Feb 09, 2010, 00:43 IST |
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No revision of open offer price for additional 20%, says INOX.
In another twist to the war of words between Reliance MediaWorks (which operates BIG Cinemas) and theatre chain Fame India, the latter’s managing director, Shravan Shroff, told Business Standard today that “Reliance Media had not made any written offer to me on a higher price”.
Reliance Media had said in a letter dated February 4 that Fame had rejected its offer to buy stake at Rs 80 per share, which was much higher than what INOX Leisure paid to Fame for the stake (Rs 44 per share).
Reliance Media Works CEO Anil Arjun had sought a clarification from Shroff, raising issues of “fairness, transparency and legal compliance, including protection of the interest of minority retail shareholders”.
Anil Ambani’s theatre chain had been vying to buy stake in Fame India (earlier Shringar Cinemas) for almost two years. However, there was little progress. Meanwhile Fame India’s promoters, the Shroff family, recently sold its 43.28 per cent in a bulk deal to INOX for around Rs 66.48 crore. INOX paid Rs 44 per share. Further, INOX bought an additional 7.5 per cent, which now makes INOX the majority stakeholder of Fame, with 51 per cent. This did not go down well with Reliance MediaWorks. Meanwhile, INOX has said it was not planning to revise its offer price of Rs 51 per share for the sequel, the mandatory open offer for an additional 20 per cent stake, although Fame’s market price on the Bombay Stock Exchange (BSE) stands higher at Rs 55.95 (today’s closing rate). Fame India’s stock closed at Rs 53.30 on the BSE on Friday.
Deepak Asher, director, INOX, told Business Standard: “The offer price of Rs 51 is what we felt was the value for our shareholders. The market moved after that. If we revise the price now, there is no guarantee that the market will not move further. So, as of now, we will stick to the offer price of Rs 51. We bought INOX shares in two instalments. For the first instalment of 44 per cent, we paid Rs 44 per share. For the second, 7 per cent instalment, we paid Rs 50.75. Sebi rules say that our mandatory offer price should be the highest at which we bought the shares. So, we rounded off the Rs 50.75 price to keep the open offer price at Rs 51.”
Inox’s open offer for the additional 20 per cent in Fame India will begin on April 1. This offer, to acquire up to 82,31,759 equity shares, will close on April 20, 2010.
Fame India currently has a Rs 50 crore debt from banks and financial institutions, and another Rs 80 crore debt from foreign currency convertible bonds.
“With all due respect to Fame promoters, INOX has a better credit rating and we can have the debts refinanced at lower interest rates. So, the Fame debt does not bother us,” said Asher.
On the issue of re-branding, Asher said, “We would look at re-branding Fame. Under the Sebi rules, we do not have operational control over Fame till the open offer goes through. So, in another three to four months, we would decide on whether to re-brand them as ‘INOX-Fame’, or carry out any other re-branding exercise.”
“But, clearly, we would evaluate the properties, hardware and equipment currently used in Fame, which would be re-shuffled to give Fame properties an INOX look and feel,” Asher said. “The entire branding exercise is expected to take around one year.”
INOX Leisure’s only earlier acquisition was ‘89 Cinemas’ in Kolkata in 2006. This was an equity swap deal between INOX and Calcutta Cine, which owned the four-screen multiplex. INOX and Calcutta Cine boards approved the merger agreement and issue of 33 equity shares of Rs 10 each of INOX for every equity share of Rs 1,000 each of Calcutta Cine. This entailed an issue of shares amounting to three per cent of INOX’s paid-up capital to Calcutta Cine shareholders. Calcutta Cine also owned a three-screen multiplex at Durgapur in West Bengal.
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