SEBI asks JK to go for public offer

MUMBAI, July 19: The takeover of Vikrant Tyres by J K Industries has taken a new turn with SEBI forcing it to make a minimum unconditional ...

MUMBAI, July 19: The takeover of Vikrant Tyres by J K Industries has taken a new turn with SEBI forcing it to make a minimum unconditional offer for 20 per cent of the Vikrant shares, instead of the 15.01 per cent planned earlier.

JK has accordingly made a revised offer for 20 per cent (51,26,900 shares) as per Sebi’s wishes. However, the public announcement for the revised offer mentions two new points. One is that JK is making an appeal to the ministry of finance for relief against the Sebi order. The announcement says that in case JKI succeeds in its appeal, its obligation to purchase the shares will be restricted to 15.01% (38,48,000).

The second new point is that in the event the response to the offer results in JKI getting a total of less than 51 per cent of the issued capital, it will together with Karnataka State Industrial Investment and Development Corporation (the promoter of Vikrant Tyres), propose a further preferential allotment. The new preferential allotment will be so as to enable JKI to hold 51% of the issued equity capital while KSIIDC holds 26%.

JKI was making the offer for acquiring 15 per cent, because the plan for privatisation of Vikrant Tyres, as worked out by KSIIDC, envisaged a holding of at least 51 per cent by a strategic alliance partner, for which JKI was chosen. The company had already made a preferential allotment of 90,000 shares (35.11 per cent of enhanced capital) at a price of Rs 76 per share to JKI. Besides, KSIIDC also divested 4,82,298 shares (1.88%) in favour of JKI. So at the time of making the open offer, JKI holds 36.99 per cent of the shares of Vikrant Tyres. The offer price remains Rs 76 per share. With the new offer, JKI is effectly readying to take its stake up to 56.99% of the voting capital.