Shareholders Force Poll At Classic Egm

Shareholders of the beleaguered non banking finance company, ITC Classic Finance Ltd, sought a modification of the swap ratio in the proposed amalgamation scheme of the company with Industrial Credit and Investment Corporation of India Ltd (ICICI). They also demanded a poll on this issue at the extraordinary general meeting (EGM) held here yesterday even as the management admitted that Classic was saddled with a Rs 1000-crore debt burden.

Voicing their dissent over the swap ratio of 15:1 as proposed by the two valuers, C C Choksi & Co and Bansi S Mehta & Co, the shareholders demanded a swap ratio of 3:1, and submitted applications signed by those present at the meeting. "The exchange ratio should be one equity share of the face value of Rs 10 each fully paid-up in the transferee company for every three equity shares of the face value of Rs 10 each credited as fully paid up in the transferor company on the basis of six months average share price prevailing in the Calcutta Stock Exchange", said Rakesh Sinha, an equity shareholder of the company.

 

Though the shareholders forced a poll on the issue, it was defeated by an overwhelming majority, sources said. Advocate S P Banerjee, who chaired the meeting, appointed two shareholders, V P Subramanium and Dilip Pal, for scrutinising the polling procedure. The results, however, will be announced today.

Responding to shareholders' grievances regarding the swap ratio, Saurabh Misra, director on ITC Classic's board, said that "the proposition should be supported since it covers the greatest good for greater numbers. The scheme provides the best opportunity to redeem the investment in Classic." "We need to balance this proposal with the fact that the large scale of Classic's losses and non-performing assets makes the survival of the company unlikely on a stand-alone basis," he added.

Besides, the company's net asset value is negative, is burdened with a whopping Rs 1,000 crore debt today, and is likely to incur losses in the next three-four years, Misra added.ITC's support by providing Rs 350 crore low interest bearing funds for 20 years has also helped to bridge the gap between the realisable value of the assets and the liability of the company.

Meanwhile, shareholders approved the company's resolution for 14 per cent cumulative redeemable preference shareholders and the subsequent 15 per cent cumulative redeemable preference shares.

Classic shareholders also approved the move to enhance the authorised share capital of the company from Rs 400 crore to Rs 525 crore to enable the private placement of preference shares amounting to Rs 350 crore with ITC Ltd.