Stocks

Warrants issue: Metropolitan SE plans out-of-court deal with MCX

Suresh P Iyengar Mumbai | Updated on January 22, 2018 Published on December 14, 2015

The bourse, if it succeeds in the out-of-court settlement, will get back the ₹20 cr deposited with the High Court

The Metropolitan Stock Exchange (formerly MCX Stock Exchange) is planning an out-of-court settlement to end the court battle with the MCX, which has sued the stock exchange in the High Court for extinguishing its warrants in the stock exchange.

“Our board members are of the considered view that it is better to settle the case with MCX by reinstating its warrants that were extinguished and give it enough time to sell them to meet the norms set out by the capital market regulator SEBI,” said a source in the stock exchange. The stock exchange, if it succeeds in the out-of-court settlement, will get back the ₹20 crore deposited with the High Court. Moreover, Metropolitan SE need not deposit another ₹21 crore as ordered by the Court in October. Both the deposits put together are equivalent to the value of warrants cancelled by the bourse.

Anchor investors

MCX, along with its erstwhile parent Financial Technologies, were anchor investors in Metropolitan SE. It held these warrants and less than 5 per cent equity in the stock exchange. The warrants were supposed to be converted into equity but could not be done within the stipulated timeframe due to lack of demand.

MCX moved SEBI seeking to extend the deadline and allow it to hold up to 15 per cent in the stock exchange following MCX becoming a deemed stock exchange upon the merger of FMC with SEBI. However, SEBI did not heed to MCX’s request. The rights issue announced by the Metropolitan SE further sealed MCX’s efforts to divest the stake.

Adjourned to Jan

In June, MCX moved the High Court to pass an interim order against the Metropolitan SE from extinguishing its warrants worth about ₹41.59 crore. The case, which came up for hearing on Monday, was adjourned and will now be heard in January.

The stock exchange board feels that it should focus on ways to improve business rather than fighting court cases, said a source. The Metropolitan SE recorded a loss of ₹15 crore during the September quarter. Even worse, to generate an income of ₹6 crore, the exchange incurred an expense of ₹22 crore.

Published on December 14, 2015
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