Sebi exempts AMI Holdings from open offer in Southern Petrochemical

Market regulator Securities and Exchange Board of India (Sebi) today exempted AMI Holdings from the open offer obligation in Southern Petrochemical Industries.

The company had proposed to issue convertible warrants to the tune of 3.7 million to AMI holdings, which on conversion would have triggered the open offer obligation as the voting rights acquired would have been in excess of 5% during a financial year.

AMI Holdings, which is associated with the promoter group of the company, had sought an exemption from the open offer obligation from Sebi on the grounds that Southern Petro, which had availed Corporate Debt Restructuring (CDR) in 2003, wasn't in a position to borrow more from banks and infusion of capital was critical for the survival of the company.

After assessing company's condition, Sebi noted that the company was indeed not in a position to repay its borrowers given its poor financial health and also the allotment of warrants and their conversion into equity shares wasn't resulting in any change in control in Southern Petrochemical.

“In view of the foregoing, taking into consideration the interests of the Target Company and its shareholders, I am of the considered view that this is a fit case where exemption needs to be granted to the proposed acquirer (AMI Holdings) from complying with the open offer requirements stipulated under regulation 3(2) of the Takeover Regulations...”said Prashant Saran, whole time member, Sebi.