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Sebi nixes switching by investors in VST offer

BS Corporate Bureau

The Securities & Exchange Board of India (Sebi) has decided not to allow shareholders of VST Industries, who have already tendered their shares to Russell Credit, to switch over to Damanis' offer of Rs 151 a share.

A senior Sebi official told Business Standard, "We are going by our existing policy which has been in place since inception and has been used on several occasions. We cannot make a policy change in the midst of an open offer. We have consulted with our legal counsels before taking the decision."

The markets watchdog has sent a communication to this effect to ASK Raymond James, advisor to the Damanis-promoted Bright Star Investments.

When contacted, John Band, chief executive officer, ASK Raymond James, told Business Standard: "It is an unfortunate decision as it is against the interests of minority shareholders of VST." Band indicated that Bright Star has yet to decide on the future course of action. "Our last resort will be legal action, of course," Band said.

Sebi's view is based on an opinion from leading lawyer Shardul Shroff.

The market watchdog has proceeded on the basis that by accepting Russell's offer, the complaining shareholders have entered into a contract and withdrawal from acceptance would tantamount to unilateral cancellation of a contract. This means that almost four to five per cent of VST shareholders who had subscribed to the Russell offer, now will not be able to offer their shares to the Damanis in order to rake in better returns.

Russell's offer stands at Rs 125 a share, against Damanis Rs 151, and cannot be revised any further.

RELATED STORY:
Andhra High Court stays VST open offer

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