Market regulator Securities and Exchange Board of India (Sebi) today granted exemption to promoters of media company Deccan Chronicle Holdings from making an open offer after their proposed buyback of shares which will increase their holding to 73 per cent.
After the buyback, outstanding shares of a company declines while the promoters' holding goes up. Sebi guidelines mandates that promoters of a company will have to make an open offer if their shareholding goes beyond 55 per cent. However, in this case the promoters already have more than 55 per cent stake.
"This is a fit case for grant of exemption, from the applicability of Regulation 11(2) of the Takeover Regulations with respect to the increase in percentage shareholding and voting rights consequent upon the proposed buyback of equity shares by the target company," Securities and Exchange Board of India said in an order today.
The board of directors of Deccan Chronicle passed a resolution approving the proposal to buy back a maximum of 3,50,00,000 fully-paid shares with face value of Rs 2 each at a maximum price not exceeding Rs 100 per share for an aggregate amount not exceeding Rs 180 crore.
The proposed buyback would increase promoters' stake from 63 per cent to about 73 per cent.
The promoters of the company T Venkattram Reddy, T Vinayak Ravi Reddy, P K Iyer and T Urmila Reddy had earlier requested Sebi through a letter to exempt them from making an open offer after the buyback.
While giving the order in favour of the promoters , Sebi said, "The proposed buyback offer would not result in change in control over the target company, as the acquirers (promoters) are already in control over the target company."
The promoters of the target company are holding 1,54,282,250 equity shares representing 63 per cent of the voting rights of the target company, and their holding would rise to more than 73 per cent after the buyback.
