Swedish Match moves SC over Wimco penalty

Shareholders of Wimco will have a wait for some time before they get the open offer from Wimco's parent Swedish Match AB.

The parent company has filed a petition in the Supreme Court (SC) on October 5, requesting for a reduction in the rate of interest on the amount payable to investors in the proposed open offer, Swedish Match has followed in the footsteps of Clariant which knocked on the apex court's doors for a reduction in the interest rate.

In Clariant's case, the SC had reduced the interest for the period of delay from 15 per cent to 10 per cent and also directed the company to pay the interest only the original shareholders of the company who are still holding the shares. The reference date is taken as September 27, 2000.

Swedish Match in a recent communication to the minority shareholders said, "we have - in accordance with the wish of the SC - filed with the court a petition regarding the terms and conditions of the offer. Consequently, the matter already rests with the SC and we are awaiting further clearance from the court before we are able to make the offer. The company had also asked the Securities and Exchange Board of India for guidance on the terms of the offer but the regulator said that since Supreme Court had already given a ruling it would not be able to give any guidance."

Sebi officials said, "We cannot do anything about it now since the highest court of the land has given its ruling. They will have to abide with it or file a review petition."

Swedish Match had to make a public announcement for the open offer within the stipulated 45 days of the Supreme Court order on August 25, 2004. The SC had upheld the order passed by the Securities Appellate Tribunal (SAT) last year. The 45-day period expires on Saturday, October 9, 2004.

The SAT in its order last year has asked the multinational to make the open offer to buy out a minimum 20 per cent shares of Wimco Ltd at not less than Rs 35 a share and to pay interest at 15 per cent per annum on the offer price to the shareholders for the loss of interest caused from January 27, 2001 till the actual payment.

The Swedish multinational had increased its stake in Wimco from 52.11 per cent to 74 per cent without making a public announcement by buying shares from the other promoter (Jatia group) of the company. These shares were acquired at Rs 35 a share on September 27, 2000.