Sebi directs Alchemist Realty's promoter, another entity to make open offer

Regulator Sebi Tuesday directed Alchemist Realty's promoter KDS Corporation and a shareholder to make an open offer as they failed to disclose acquisition of the firm's shares back in August 2010.

KDS Corporation was holding 42.30 per cent, and 45.45 per cent shares in Alchemist as on March 31, 2010 and March 31, 2011, respectively.

The other entity -- Endogram Leasing and Trading Company -- is one of the shareholders of Alchemist and held 11.61 per cent shares, as on March 31, 2010 and March 31, 2011.

According to an order, KDS held 99 per cent or more shares in Endogram from January 2006 to March 2011, making the latter a subsidiary of the former during the said period. As per SAST (Substantial Acquisition of Shares and Takeovers) Regulations, a firm and its holding company or subsidiary are deemed to persons acting in concert (PAC), unless the contrary is established.

Since Endogram was a subsidiary of KDS during the said period, it qualified to be a PAC with the promoter entity.

The combined shareholding of KDS and Endogram had increased from 53.91 per cent as on March 31, 2010 to 57.06 per cent as on March 31, 2011. The same had happened on account of purchase of 23.34 lakh shares or 3.15 per cent stake of Alchemist by KDS through a block deal with one Manbhavan Buildwell in August 2010.

Since the acquisition of 3.15 per cent stake by KDS had resulted in the combined shareholding of KDS and Endogram crossing the threshold limit of 55 per cent prescribed under the SAST Regulations, the two entities were required to make a public announcement to acquire the shares. However, they had failed to do so.

"... the combined shareholding of KDS and Endogram in the target company (Alchemist) increased from 53.91 per cent as on March 31, 2010 to 57.06 per cent as on August 18, 2010, due to acquisition of 3.15 per cent shares by KDS," the regulator said.

According to the order, since the shareholding had crossed the threshold limit of 55 per cent provided under SAST Regulations, KDS and Endogram were "clearly required to make a public announcement" to acquire shares of Alchemist.

"The noticees (KDS and Endogram) shall, jointly or severally, make a public announcement to acquire shares of the target company in accordance with the provisions of the Takeover Regulations, 2011, within a period of 45 days from the date of this order.

"The noticees shall, along with the offer price, pay interest at the rate of 10 per cent per annum from the date when they incurred the liability to make the public announcement till the date of payment of consideration, to the shareholders who were holding shares in the target company on the date of violation and whose shares are accepted in the open offer, after adjustment of dividend paid, if any," Sebi said.

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