Sebi allows Deccan Chronicle to buyback 3.5 cr shares

Market regulator Sebi today allowed the Deccan Chronicle Holdings Ltd to buyback 3.45 crore shares or 14.17% equity from the market at an estimated cost of Rs 270 crore.

This will be the second time the Deccan Chronicle would come out with an offer to buyback its shares, following which the equity of the promoters in the company could go up to 73.83% from 63.37% currently.

Securities and Exchange Board of India (Sebi), while exempting Deccan Chronicle from making the mandatory public announcement under the Takeover Code before coming out with the buyback offer, has, however, asked the company "not of seek any further exemption pursuant to any further buyback".

The company had come out with the first buy-back offer in August 2009 when it bought back 4.84% of the total share capital.

Deccan Chronicle had earlier in January 2011 obtained the approval of shareholders to purchase equity of Rs 2 each at a price not exceeding Rs 189 per share for an aggregate amount of up to Rs 270 crore.

In case of 100% response to the buy-back offer, the equity of promoter group will go up to 73.83% in the company from 63.37 per cent.

Referring to the general issue of companies buying back their own shares, Sebi order said, "repeated buyback offers by a company is not something that Sebi, as a regulator, would like to encourage, given the fact that it would be misused by entities to consolidate their holding at the expense of the company."