BK Modi ups ante on Modi Rubber

The fight over Modi Rubber took a new turn on Tuesday with BK Modi assuring financial institutions that he was willing to offer Rs 95 per share in the company.

This comes close on the heels of financial institutions committing to sell 66 per cent equity in the company to his brother, VK Modi, who has also offered Rs 95 per share in the company.

VK Modi's shareholding will go up to 66 per cent following the acquisition of financial institutions' stake and BK Modi's stake continues to be 22 per cent.

Besides, VK Modi had also agreed to pay 130 per cent of the principal. This means he will clear off the entire principal outstanding of Rs 600 crore.

BK Modi has also told financial institutions that he was ready to match this offer. BK Modi has written to financial institutions that he was willing to offer Rs 95 per share for Modi Rubber and was ready to deposit 20 per cent of the offer money as advance deposit

He has also told the financial institutions that the bidders should be called for negotiations to ensure transparency. According to BK Modi, he was willing to participate in an open bid process to acquire shares of Modi Rubber.

The move by BK Modi comes after VK Modi offering Rs 95 per share for 100 cent stake in Modi Rubber. "We have written to financial institutions asking for an open bid," BK Modi said on Tuesday.

BK Modi has also noted that the financial institutions are following a model of auction among promoters in other Modi group companies, Modi Industries and Modi Spinning.

A different model for Modi Rubber can raise questions, he noted. Meanwhile, a section of Modi Rubber employees have moved the Delhi High Court changeling the move by the financial institutions to award the shares to VK Modi.

Some of the minority shareholders have also approached the Securities and Exchange Board of India challenging the move by the financial institutions.