Rediff Seeks To Double Adr Size
Rediff.com has sought the government's permission to double its American depository receipts offering from $75 million to $150 million.
However, the Foreign Investment Promotion Board has decided to refer the proposal to the Cabinet Committee on Economic Affairs as it does not have the powers to clear proposals of over Rs 600 crore.
The company plans to include an underwriters' green-shoe option and 200,000 ADR-linked stock options to employees after the ADR issue.
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While both the department of economic affairs and the infotech ministry supported the proposal, the board noted, "The proposal was likely to exceed Rs 600 crore in value terms. Hence, it will need to be submitted to the CCEA for approval."
Earlier, the company sought and received approval for raising foreign equity through the issue of ADRs and American depository shares of up to $75 million, which included the underwriters' green shoe and the ADR-linked employees' stock options .
After the proposed ADR issue, the foreign equity, including that of non-resident Indians, will increase to 49 per cent in the company, which proposes to utilise a maximum of 50 per cent of the ADR issue proceeds.
The approval was subject to the Securities and Exchange Board of India and Reserve Bank of India guidelines.
On May 19, Rediff.com India filed a registration statement with the Securities and Exchanges Commission in the US relating to the company's initial US public offering.
The public offering is being managed by an underwriting group led by Goldman Sachs & Co. Credit Suisse First Boston, and Robert Fleming Inc are the co-managers in the offering.
Rediff.com has reported an accumulated loss of $8.3 million since it began operations in 1996. In the fiscal ending March 31, 2000, the company incurred a net loss of $6.7 million against $985,000 in the previous year.
In April 1998, Rediff.com sold 5.5 million shares to Draper India International for Rs 3.85 crore. In 1999, it disposed of 8.9 million additional equity shares to Intel Corporation, Queenswood Investments, GE Capital Services, Citicorp Finance and Pacific Century Cyberworks India for
Rs 87 crore.