West Coast open offer for Rama Newsprint flops

West Coast Paper Mills' open offer to acquire 20 per cent stake from the shareholders of Rama Newsprint & Paper Mills has flopped. The offer, which closed yesterday, has managed to receive only 0.5 per cent subscription.

A West Coast official said only 11 lakh shares, representing 0.5 per cent stake, were rendered by 5,500 applications.

"The figure may vary if some applications are cancelled. The exact figure will be announced early next week," he said.

A sudden bullishness at the counter kept the stock well above the offer price, keeping shareholders off the offer. The stock closed yesterday at Rs 10.07, nearly 24 per cent higher than the offer price.

He said representatives of West Coast will join the Rama Newsprint board once the procedure relating to the offer was over. It is expected that all the formalities would be cleared by mid-December.

The official said the Bangurs, promoters of West Coast, were unperturbed with the failure of the offer as they enjoyed the support of the financial institutions as well as the promoters of Rama Newsprint.

"West Coast has nearly 34 per cent stake in Rama Newsprint. In addition, it has arrangements with the existing promoters, the Vashu Ramsinghani family, that it would enjoy the first rights of refusal in case the latter wants to pull out. Also, West Coast is paying off the financial institutions and therefore enjoys the confidence of the institutions," he added. The Ramsinghanis hold 24 per cent stake.

The mandatory open offer followed West Coast's acquisition of a 33.85 per cent stake in Rama Newsprint from its lead banker ICICI Bank.