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June 9, 2001
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Money > Business Headlines > Report June 9, 2001 |
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Andhra High Court stays VST open offerG Singa Rao The battle for gaining controlling stake in VST Industries took a new turn on Saturday with the Andhra Pradesh High Court staying the open offer. Justice Gopal Reddy restrained both Bright Star and Russell Credit from proceeding further in acquiring VST shares. In a motion moved by senior counsel V Rajagopala Reddy on behalf of VST shareholders, MV Subramanyam and Anita Paul, the petitioners argued that both the letters of offer are "misleading and detrimental" to the interests of VST. They also argued that the offers have been in violation of the provisions of the Sebi Act and Sebi Takeover Regulations of 1997. The petitioners also alleged that Sebi's permission to allow open offers by Russel Credit and Bright Star had various infractions. They claimed that Sebi failed to ensure proper and adequate disclosures. The Centre, Sebi, Bright Star, Russel Credit and VST were made respondents to the petition. The judge posted further hearing after two weeks. Sebi's counsel PVSS Rama Rao has accepted to file the counter shortly. The petitioners said the Damanis do not have the management expertise to run VST. The petitioners pointed out that the Damanis recently enhanced the offer size from 20 per cent to 30 per cent. This would take the aggregate shareholding of Bright Star in VST to at least 45.49 per cent which would give them a grip on the management of the VST, they said. The petitioners also argued that the Damanis are not financially sound citing the fact that they did not deposit the required 25 per cent of the total consideration in the form of cash as escrow. They further argued that Bright Star has not duly disclosed the identity of the acquirers in the letter of offer. On the offer made by Russel Credit of ITC, the petitioners claimed that BAT is seeking to indirectly increase its stake in VST through ITC, since the former has not been given permission to do so directly. They contended that the effect of combined shareholding of BAT and ITC is also not disclosed in the letter of offer. "ITC already has a share of over 50 per cent in the tobacco market. Acquisition of 20 per cent in VST through Russel Credit would result in greater monopolies. However, such aspects of the proposed acquisition, including the material information about common shareholding of BAT in ITC, have been withheld in Russel Credit's offer letter," the petitioners pointed out.
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