1:15 Swap Set For Icici, Anagram Finance Merger

The boards of Industrial Credit and Investment Corporation of India Ltd (ICICI) and Anagram Finance Ltd (AFL) met on Saturday and approved the proposal for the merger of AFL with ICICI effective April 1, 1998, and fixed a swap ratio of one equity share of ICICI for every 15 equity shares of Anagram.

In addition, the Lalbhai family, the principal shareholders of Anagram have offered the minority public shareholders the option of either continuing as shareholders of the merged entity or prior to the merger becoming effective sell their shareholding in Anagram to the investment companies at a price of Rs 18 for very equity share of face value of Rs 10.

"The merger is subject to necessary approvals and due confirmation of the scheme of amalgamation by the high Courts of Bombay and Gujarat", an ICICI release said. The swap ratio was based on the recommendations of two independent accounting firms, CC Choksi and Company and Bansi S Mehta and Company.

"Prior to the merger becoming effective, certain identified investment companies of the Lalbhai family would bring in Rs 125 crore which would be converted into 3 equity shares of ICICI on the date of the merger becoming effective to compensate for the erosion in networth and estimated losses on asset portfolio. ICICI will also have the benefit of a backstop facility of Rs 100 crore for any further potential losses on the retail portfolio," said the release.

As per the agreement, all assets, excluding intra group assets which will be purchased by the investments companies of Lalbhai family, and liabilities of Anagram will be transferred to ICICI and the latter would absorb the branches and employees as per its requirements with the balance being taken over or transferred by the promoters.

In the interim the affairs of Anagram will be conducted in trust for and on behalf of ICICI and during this period, ICICI would have the right to appoint a transition team to oversee the operations of Anagram.