DLF plays down investor face-off

Public issue likely to hit market by mid-July.

Realty major DLF clarified that the controversy involving its minority shareholders will not delay its public issue. The Rs 13,600 crore float is expected to hit the market by mid July.

"There has been no dilution in the shares that the company plans to offer through its IPO," said Saurabh Chawla, senior vice-president, finance, when asked if the size of the issue would be reduced owing to volatility in the market and trading of the recent issues below par.

Complaints have been raised by some minority shareholders that they were denied participation in the debenture issue floated by the company late last year and that there was no clarity at that time about company going public.

DLF clarified that it had sent letters of offer for debentures, it had issued to its minority shareholders, in December 2005. The issue was opened for subscription on December 29, 2005 and had closed 21 days later on January 18, 2006.

The postal department had filed a case with the police on June 14 claiming that DLF had forged its postmark. The case is under investigation.

DLF claimed that at the time the offer letters were sent, it had no intention of going public. Chawla said the decision was taken only in March 2006.

Then, the company decided to convert each debenture into 10 equity shares. The company also offered a bonus issue, whereby it offered seven bonus shares for every equity share.

Therefore, a person holding just a share prior to conversion stood to gain 87 additional shares. Chawla hinted that those minority shareholders, who are now accusing DLF of fraud, are 'basically upset about a missed opportunity'.

From the total applications received, 128 allotments were made, of which minority shareholders accounted for 78 of them, stated a DLF release.

"These 78 applications prove that the company had in fact posted the letters of offer. It makes no sense for the company to randomly select a few shareholders and only inform them," said Chawla.

Claiming that the shareholders were aware that DLF was being valued at that time, he added that the company had followed the law, with all shareholders being given notices through certificate of posting as well as advertisement in newspapers.

DLF had appointed Star Mailing Solutions, a bulk mailing agency, to send the letters. The letters were dispatched on December 26, 2005, said Chawla.