Templeton, Canbank Set To Move Sebi Again On Sterlite

Templeton Asset Management (India) Pvt Ltd and Canbank, who between them had lodged around 2-2.5 lakh Indal shares with Sterlite Industries in response to the latter's open offer, is moving Securities and Exchange Board of India (Sebi), again following Sterlite's decision not to accept the shares.

Following rejection of their proposal to issue optionally convertible preference shares (OCPS) at their extra-ordinary annual general meeting, Sterlite had communicated its inability to accept the shares.

Sebi had issued a show cause notice to Sterlite after this. Templeton and Canbank who had earlier moved Sebi in June have once again appealed to the market regulator. Meanwhile, the individual shareholders too are trying to forge an united front in presenting their case before Sebi. The individual shareholders of Indal are also in touch with Manu Bhai Shah of Consumer Education and Research Centre, in a bid to resolve the tricky issue.

 

It may be mentioned that Sebi had issued a show-cause notice to Sterlite seeking its view as to why the regulatory body should not impound the escrow account created by Sterlite, for meeting obligations arising out of its public offer to acquire control of Indal.

Sterlite, in the meantime is preparing to move the appellate authority of the finance ministry in case Sebi rules against it in the ongoing tussle relating to shares of Indian Aluminium.

Sebi has also asked Enam Financial Consultants to furnish the details of the EGM of Sterlite shareholders held on 25 July to seek fresh approval for the resolution pertaining to the allotment of optionally convertible preference shares to partly pay for the open offer price of Rs 221 per Indal share.

Meanwhile, individual shareholders alleged that Sterlite EGM was sparsely attended and mostly by Sterlite employees. Besides, the company had also failed to ask for a poll and the proposal was rejected by a show of hands.

Sterlite had earlier said the majority shareholders had rejected the proposal though the management had voted in favour of the resolution.

In a letter to Sebi, the shareholders claimed that "it is submitted that the price determined by Sterlite is Rs 221 per share of Indal. The method of payment of Rs 131 in cash and the balance in OCPS is only for discharging that price.

It is the responsibility of Sterlite to obtain such approvals as are required. It is the option of the Indal shareholders to lodge such shares and receive a payment of Rs 221. If Sterlite does not receive the necessary approvals for the issue of OCPS it must pay Rs 221 per share in cash, to those shareholders of Indal who have accepted their offer and lodged shares with them.''

Sterlite's letter dated May 25 was unconditional. It did not specify that this offer was subject to their shareholders' approval,'' the letter said. ``Enam financial consultants vide their advertisement dated June 1 1998 and published on June 2 1998, the last date for acceptance of the offer have stated that Sterlite has been legally advised that the guidelines relating to preferential issue do not apply to the proposed OCPS, nevertheless compliance of such guidelines entails inter-alia, obtaining the approval of its lenders, domestic and foreign, as well as passing of a fresh resolution at an EGM," the letter added.

"How can Sterlite attempt to refuse the acceptance of shares offered by issuing an advertisement on the last day," the letter queried, adding that the Indal shareholders had entered into a valid contract with Sterlite on the basis of their offer.