J & N Moves Calcutta Hc Against Sebi Ban
The Securities and Exchange Board of India ban on Jenson & Nicholson (J&N) accessing the capital market through a rights or public issue has finally landed up in the courts. The company filed a writ petition in the Calcutta High Court on Thursday, seeking a stay order on the Sebi ban.
"We will go to the divisional bench and if necessary to the Supreme Court if our writ petition is rejected in the Calcutta High Court," J S Chatterjee, director (finance) of J&N said.
"We are in no financial trouble at all because of this ban on public and rights issue and our Instacolour project will sail through with no problem. However, our name in the market has been hurt and we will certainly not accept this. We know that we are on the right side of the law and will do everything to clear our name," Chatterjee said.
Sebi recently debarred J&N from accessing the market for two years for cancelling its rights issue of convertible debentures.
J&N is in the process of preparing a detailed legal document in support of the company's stand that they have violated no law in the devolvement of their issue. The document is going to be submitted to the Sebi appellate body challenging the latter's order.
J&N had earlier slapped a Rs 5-crore suit against its co-manager and underwriter to the aborted rights issue, Smifs Capital Markets and Vasundhara Holdings, which was one of the parties owing to which J&N withdrew the issue.
Sources said the perceived funds crisis of the company does not give the real picture as J&N has had detailed discussions with a consortium of banks which includes the Bank of India and the IDBI and term loan needs of Rs 9 crore to pull through its Instacolour project are almost finalised.
"In any case we have numerous routes for fulfilling our need for funds like company deposits, preferential allotment, etc. Also, the proposal for private placement of shares with Tikkurila OY will be taken up after the dust settles on the present issue," Chatterjee said.
Sinha, who is the promoter of the company, holds one-third of the company's equity. And since 25 per cent of the total equity has to be held by the ordinary shareholders, only 38 per cent remains outstanding. "Even if Turner Morrison bought the whole 38 per cent, which is highly unrealistic, it would merely have led to a boardroom battle. So the perception that what we did was in fear of a takeover is incorrect," Chatterjee said. "When we found out that as a result of allotment an existing shareholder was exceeding the 10 per cent holding level, we realised that this would be violating the takeover code unless a public offer was made. So we had to take the necessary action.
"If we had not done this then the ordinary shareholders could have later accused us of depriving them of an option to buy in an open offer. Once we cut off the offer by Turner Morrison group, we fell short of the required 90 per cent and according to existing guidelines were forced to refund the money to those who had subscribed," said Chatterjee.