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Sunday, Feb 23, 2003

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Delco Remy plans `individual' open offer

C.R. Sukumar

Delco Remy currently has only 350 shareholders in the `public' category holding 68,450 shares. They propose to offer an acquisition price of Rs 44.15 per share.


THE promoters of Delco Remy Electricals India Ltd (DREIL) are planning to come out with an open offer shortly.

This follows the Securities and Exchange Board of India (SEBI) granting special exemption to the promoters from making a formal public announcement and also from following the other formalities pertaining to the open offer to the public shareholders to acquire the balance 1.82 per cent stake.

Subsequent to the preferential allotment made to the foreign promoter - the Korea-based Delco Remy Korea, the aggregate holding of the promoters group, both Indian and foreign, reached 98.18 per cent of Rs 3.77 crore of paid-up equity.

Delco Remy had allotted 2,42,572 shares of Rs 10 each at a premium of Rs 34.15 per share to the foreign promoter in terms of SEBI guidelines during last fiscal.

Following this, the promoters filed an application with the SEBI during February last year under sub-regulation (2) of Regulation 4 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 seeking exemption from making a public announcement and complying with other formalities of open offer in terms of Regulation 11(2) with regard to the proposed offer.

The promoters submitted to the market regulator that they were currently holding 98.18 per cent of the total share capital of the company and public shareholding was mere 1.82 cent.

According to them, Delco Remy currently has only 350 shareholders in the `public' category holding 68,450 shares. They propose to offer an acquisition price of Rs 44.15 per share. The control of the company already vests with the promoters' group and the proposed acquisition would enhance their stake to 100 cent.

Stating that the expenses pertaining to public announcement and other formalities associated with the open offer were not advisable for 350 shareholders with 68,450 shares, the promoters group said they would, however, make the open offer for buying directly from each of such shareholder by way of individual letters.

The Takeover Panel, which considered the application filed by the Delco Remy promoters, recommended that the exemption be granted to the promoters group from making public announcement to purchase the entire shareholding of all the remaining shareholders of the company including that of financial institutions and banks, if any, individually by making a written offer to be sent through registered post with acknowledgement due at a price to be fixed in accordance with the Takeover Code but in any event not less than Rs 44.15 per share.

However, the SEBI Panel said, the acquirers need to file a certificate of Chartered Accountants to the effect that such individual letters to all remaining shareholders have in fact been posted by `Registered Acknowledgement Due' post.

Consequently, the company would be allowed to delist its shares from the bourses.

In a latest communiqué to the stock exchanges on Saturday, Delco Remy said the promoters now proposed to make an offer for the acquisition of remaining public shareholding of 68,450 shares at a price worked out and approved as per SEBI guidelines.

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