In a fresh effort to get the 44 per cent stake in Modi Rubber held by the financial institutions, the Modis have offered a fresh guarantee to pick up the shares.
They have also offered to give another flat at Mayfair Gardens in Mumbai to the institutions. Earlier, they had offered two flats.
Modi Rubber director B K Modi said: "Our bankers have written to the financial institutions giving them a guarantee to buy their entire shares. We have also decided to give them one more flat at Mayfair Gardens."
The financial institutions on Friday had decided not to participate in the open offer. The Modis had said that the issue was held up on the mode of payment for the shares. While some of the financial institutional shares are proposed to be bought through the open offer, the Modis have given a commitment to buy out the rest of the shares as well.
The Modis have put the money required to fund the open offer for 35 per cent Modi Rubber shares at Rs 90 per share with the Hongkong Bank. The institutions wanted a similar guarantee for the remaining shares that the Modis plan to buy subsequently. The latest guarantee, Modis said, will clear the last hurdle too.
Earlier in the week, Bhupendra Kumar Modi had communicated to the Industrial Development Bank of India that the two conditions laid down by the financial institutions that they would not sell the newly acquired shares subsequently to a third-party for a higher price and would return the two Mayfair Gardens flats to the financial institutions were acceptable to him.
The open offer by the Modi brothers closes tomorrow. If the financial institutions agree to sell their stake, the Modis will end up with a shareholding of over 70 per cent.
This will also change the composition of the Modi Rubber board which is currently dominated by financial institutions. Apart from the two Modis, the financial institutions have four nominees on the board, while Continental AG of Germany, which has a technical collaboration with Modi Rubber, has a single nominee. A special meeting of the company's board is slated for July 17.
The Securities and Exchange Board of India is also likely to arrive at a decision on the 4.5 per cent Modi Rubber shares held by Modipon Fibres of Mahendra Kumar Modi.
Initially, Sebi had barred Modi from selling his shares in the market on the grounds that he formed a part of the promoters' group. In turn, M K Modi said that he had separated from the family in 1989 and had no common business interests with V K Modi and B K Modi.
