Parvinder To Review Mop-Up Plan Via Spv

Dr Parvinder Singh, chairman, Ranbaxy Laboratories, has decided to review his proposed plan to raise funds abroad through a special purpose vehicle (SPV) by offering a part of his promoters stake to that SPV, which will eventually bring down his roughly 39 per cent stake in the company.

Dr Singhs decision to review his SPV plans has been spurred by concerns voiced by foreign investors and shareholders of the company who have objected to the proposed sale through GDRs which will have his shares as the underlying security. However, he has yet to submit any amended proposal to the government.

 

These foreign investors have termed Dr Singhs proposed sale of company shares held by him as unfair as these were originally picked up by him through preferential warrants at an agreed price that was below the prevailing market rate. Hence, the proposed sale abroad would yield him a profit which was considered unfair to other shareholders.

Dr Singh had filed an application (in his individual capacity as a promoter) with the government to seek clearance from the Foreign Investment Promotion Board for creating a special purpose offshore vehicle which will hold some of the shares held by him and create GDRs which should be fungible with the Ranbaxy GDR. However, these will not be listed as Ranbaxy shares but be distinctive in spite of having underlying company shares.

While this application is still under scrutiny by the FIPB, Dr Singh has started exploring other financial options to raise funds necessary to retire a part of his personal debt liabilities.

These liabilities were incurred when he picked up these preference shares to hike his promoters stake to about 39 per cent in the company.

Dr Singh told Business Standard: In the light of what (feedback) we have picked up from the shareholders, specially foreign investors, we are trying to see in what manner we go ahead, because I do need to de-leverage my (debt) position, and yet I am sensitive to what the general public shareholders feel. So we are trying to evolve some mechanism so that we can somehow meet both the requirements. It will take some time, but as we come up with a suitable structure then we will go ahead and implement it