The Securities and Exchange Board of India said on Friday that Reliance Industries’ acquisition of Network 18 Media & Investments (NW18) through Independent Media Trust does not trigger an open offer and reiterated that the company did not violate the listing agreement by failing to disclose the transaction to stock exchanges.
The trust deed does not confer the powers of a trustee to Reliance, Sebi said, following a directive of the Securities Appellate Tribunal to pass an order in the matter before November 30.
The tribunal had asked Sebi to decide afresh whether RIL acquired indirect control over NW18 through IMT on the execution of zero-coupon, optionally & fully convertible debentures (ZOCDs) and failed to disclose it.
Sebi was examining a complaint filed by Victor Fernandes and Sangeeta Fernandes, alleging that RIL failed to disclose it had acquired indirect control over NW18 and TV18 Broadcast (TV18) through IMT, a trust established on November 22, 2011.
“The thrust of the arguments of the complainant and the basis of the computation of share price is relatable to the conversion of the ZOCDs into shares. The complainant’s reliance on the ZOCDs is only to demonstrate that ZOCDs were equal to shares of NW18 and that therefore the price paid at the time of SPA (share purchase agreement) was in consideration of the remaining shares acquired by RIL. By adopting such an argument, the complainant seeks to inflate the value of NW18’s shares and demand the same as the open offer price,” Sebi whole time member G Mahalingam said in his order.
On November 23, 2011, IMT entered into a single unit agreement (SUA) with Raghav Bahl, five entities controlled by him and NW18. As per the SUA, the parties were to act as the largest shareholders of NW18.
Source: Economic Times