The Hindu Business Line : Shareholders seek poll on Digital delisting

MINORITY shareholders of Digital Globalsoft Ltd forced the company to take a poll on a resolution seeking approval for delisting of the company's shares at the extraordinary general meeting on Wednesday.

Though the shareholders are likely to be informed about the poll result within 48 hours, it may be mentioned that the resolution could be deemed as passed since the majority stake of 50.6 per cent in Digital is owned by the parent, Hewlett-Packard (HP).

However, several shareholders of Digital turned emotional over the proposal of delisting of "such a good profit-making company".

"I was proud to be a part of such a good company," said Mr Mike Shah, the first Managing Director of Digital, who continues to hold stake in the company.

Most of the minority shareholders were hurt over the idea of losing the pride of ownership in Digital.

But they have appealed to the Chairman to re-examine "what additional benefits could be provided" for the shareholders when they opt to sell their shares back to the company.

Shareholders have also sought dividends for the current fiscal as the buy-back process through reverse book-building is scheduled to open on January 19 and close on January 23. Since the issue would be nearer to the closing of the current fiscal, many shareholders said that they might lose out on dividend payouts if the company were to be delisted before March-end.

In November, HP announced its intention to buy back stake from held by minority shareholders and subsequently delist Digital from the bourses.

HP has set an indicative buy-back price of Rs 750 per share. The company expects to commit close to Rs 1,000 crore to benefit Digital shareholders.

Currently, close to 35,000 shareholders own 16.4 million Digital shares, of which institutional holdings could be in the range of 27-30 per cent.

The indicative buy-back price of Rs 750 translates close to 50 per cent premium over the average weekly high and lows of the closing prices of Digital's shares on the National stock Exchange over the 26-week period before November-end.

Last June, Digital GlobalSoft said that it was merging HP Services India Software Organisation through a share swap.

Digital's board approved the transfer of the HPS ISO division in exchange for 278 lakh shares and 767 lakh convertible preference shares.

The preference shares will get converted into 767 lakh equity shares 18 months from date of allotment.

Thus, HP's stake in Digital would have initially increased to 73.2 per cent and subsequently to 76.2 per cent.

Analysts had slammed the proposed merger on the grounds that the terms are heavily in favour of the parent and not in minority shareholders' interests.

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