Sebi Asks GG Automotive Acquirer To Make Open Offer For 20 Per Cent

Mumbai, Nov 10: | Updated: Nov 11 2003, 05:30am hrs
The Securities and Exchange Board of India (Sebi) has asked Hakeem Auto Ltd, the acquirer of GG Automotive Gears Ltd to make a public anouncement, taking November 4, 2002 as the reference date. Sebi has also asked the acquirer to make an open offer to acquire 20 per cent from minority shareholders of GG Automotive Gears Ltd by taking June 13, 2002 as the reference date for the calculation of the offer price. Sebi chairman GN Bajpai has passed an order to this effect on November 6 and has asked the acquirer to make a public announcement within 45 days of the Sebi order. The order further stated, since no public announcement has been made in the instant case, which has adversely affected the interest of the shareholders of the target company, it would be just and equitable to direct the acquirer to pay interest at the rate of 10 per cent per annum on the offer price from March 5, 2003 till the date of actual payment of consideration to shareholders, whose shares are accepted in the offer to be made by the acquirer.

The acquirers submitted a report in September 2002 to Sebi claiming exemption from making a public anouncement for acquisition of 22.31 per cent shares of GG Automotive Gears Ltd by way of preferential allotment. Following the preferential allotment, the acquirers shareholding in GG Automotive increased to 22.31 per cent. Earlier the acquirer was not holding a single share in GG Automotive, whose shares were listed on The Stock Exchange, Mumbai (BSE) and the Madhya Pradesh Stock Exchange( MPSE).

Sebi asked the acquirer to submit documentary evidence regarding compliance with various regulations by the acquirer of Sebi (Substantial Acquisition of Shares and Takeover, SAST) Regulations. After getting a reply from the acquirer and not being satisfied with it, Sebi asked the BSE to confirm about the documents filed by the acquirer, which BSE could not confirm. In the meantime the acquirer hiked its stake in GG Automotive to 34.02 per cent from the earlier level of 22.31 per cent.

Sebi issued a show-cause notice to the acquirer following prima-facie violation of its regulations, asking the acquirer why the exemption sought by them should be given. Sebi said there was non-compliance with the provisions, by the acquirer, with regard to the acquisition of 9 lakh shares constituting 22.31 per cent equity capital on August 25, 2002 and there has been violation of SAST Regulation 10, for which the adjudication proceedings should be taken up.