This article is incorrect and Business Standard has issued a clarification on this article on December 24, 2008. Read the clarification at the end of the article.
Promoter Saminathan has acquired more than 5 per cent equity in 2008.
Securities & Exchange Board of India, or Sebi, has directed India’s largest theatre chain, Pyramid Saimira Theatre, to make an open offer as the company’s promoter, P S Saminathan, has acquired more than 5 per cent equity in 2008.
Sebi regulations allow a promoter to buy up to 5 per cent every year through the creeping acquisition route.
The capital markets regulator has advised the company to file a prospectus for public announcement for an open offer to acquire a further 20 per cent stake within 14 days. The price cannot be less than Rs 250 a share.
Sebi guidelines stipulate that in case of an open offer the price cannot be less than the price at which a company has bought its shares during the preceding 26-week period.
Saminathan has been buying shares in the open market, even as the company’s valuation has fallen. In June this year, he acquired nearly 4.9 per cent (1.37 million shares) at Rs 250 a share. Between November 19 and December 5, he picked up another 691,500 shares, according to a Sebi communication to Pyramid Saimira on Friday.
When contacted, a company spokesperson said the company had not received such a letter from Sebi. He added that the company would be in a position to comment once it had received the letter and gone through it.
As on September 30 this year, the promoters of the company included Saminathan (21.97 per cent), Uma Saminathan (1.25 per cent), N Narayanan (3.81 per cent), Rukmani Narayanan (1.64 per cent), NC Ravichandran (0.04 per cent) and Nirmal Kotecha (24.89 per cent). However, in October, P Saminathan bought a 25 per cent stake in the company from two promoters — NC Ravichandran and Nirmal Kotecha — for about Rs 150 crore at Rs 200 a share when the market price was Rs 60 a share. This would have taken Saminathan’s stake to 47 per cent.
However, in Friday’s letter, Sebi has also asked Saminathan to explain “the basis” and “reason” for the acquisition of a 25 per cent stake in the company from Kotecha and Ravichandran. The regulator has also raised questions over a disclosure made by the company where Saminathan had proposed to purchase 23.47 per cent stake from Kotecha as inter-se transfer. An inter-se transfer of shares is transfer from one promoter to another and does not trigger an open offer.
The regulator has also said that Kotecha was given a 37 per cent stake in the company less than three years ago. Sebi regulations subject inter-se transfers between promoters to a three-year lock-in period. “Please explain the reasons for making false disclosures under Sebi regulations (under Substantial Acquisition of Shares and Takeovers regulations) to the exchange and investors,” the letter said.
The Pyramid Saimira stock has risen nearly 96 per cent from Rs 38.45 a share on December 1 to Rs 75.40 a share on Friday.
CLARIFICATION
December 24, 2008
Business Standard published a report on the Pyramid affair on Sunday, after Ashok Jainani of Khandwala Securities emailed to our reporters a copy of what purported to be a Sebi letter to Pyramid Saimira. The letter, which had a Sebi letterhead, was addressed to PS Saminathan, the company’s chairman; it had a file number and a signature purporting to be that of an assistant general manager in the corporate finance department.
Our reporters spoke to Jainani, who confirmed that Sebi had despatched the letter on December 19 - the date of the signature. Our reporters then spoke separately to two senior Sebi officials, who said they would not be able to verify the contents of the letter since their offices were closed on Saturday, but that the pattern of the file number was similar to what Sebi letters usually carried, and that there was an assistant general manager in the corporate finance department. Our reporters then spoke to Pyramid Saimira’s CEO, who said he was yet to receive any letter.
On Monday, Pyramid Saimira’s corporate communications department confirmed that the company had received the letter. On Tuesday morning, the company issued a statement that it had received the Sebi communication asking Saminathan to make an open offer to buy 20 per cent in the company at Rs 250 a share. Later, it discovered that the letter was forged.
Like other media organisations, Business Standard was duped by a forgery. We apologise to all our readers, to Sebi and to Pyramid Saimira.
