Markets regulator Sebi has granted an exemption to Pantone Finvest Ltd from complying with certain requirements of takeover norms with respect to the proposed direct acquisition in Tata Communications. The exemption granted is subject to certain conditions and is limited to the requirements of making an open offer and pricing condition under the Substantial Acquisition of Shares and Takeovers (SAST) Regulations.
The order came after Pantone filed an application with Sebi seeking exemption from the applicability of certain provisions of SAST norms.
Tata Communications has a public shareholding of 25.01 per cent and non-public shareholding of 74.99 per cent which is entirely held by the promoters and the promoter group.
Government of India is also a promoter presently holding 26.12 per cent stake in the firm through the President of India.
The proposed acquisition is based on recommendations of the Department of Investment and Public Asset Management by which the Government of India proposes to divest its shareholding of 26.12 per cent in Tata Communications.
The government intends to divest its shareholding partly through offer for sale (OFS) process and partly through sale to a strategic partner– Pantone, Sebi noted in an order passed on Tuesday.
The share sale to Pantone is intended to be undertaken at the OFS price which will be determined as the part of the OFS process.
In terms of takeover norms, the price should be within the prescribed threshold.
However, Pantone and the government currently cannot determine whether the price arrived at in the OFS process will be in accordance with the norms.
If the price discovered in the OFS falls under the prescribed range, the transaction will be eligible for automatic exemption. However, in case the discovered price is not within the prescribed range, the transaction will not be eligible for automatic exemption.
Apart from the share-sale constituting 10 per cent of the share capital, Pantone would also purchase the unsubscribed portion of equity shares of Tata Communications in the OFS process. Hence, there would be a situation where the acquisition would exceed the threshold provided under SAST norms, thereby triggering an obligation for making an open offer.
Accordingly, exemption application has been filed by Pantone along with its person acting in concert (PACs) from the requirement to meet the pricing condition with respect to share sale, which would otherwise be exempt from making an open offer under SAST norms.
There will be no change in either the total equity share capital or the total share capital of Tata Communications.
Sebi, after considering the application granted exemption to Pantone from complying with certain provisions of SAST norms.
The exemption granted is limited to the requirements of making an open offer and pricing condition, Sebi said.
Among other conditions, on completion of the proposed acquisition, Pantone needs to file a report with Sebi within 21 days from the date of such acquisition, as provided in the takeover regulations.
Source: Economic Times