Terming disclosures of financial wrong-doings at Satyam as an event of “horrifying magnitude,” market regulator Sebi on Wednesday said it would take all steps under the law for which it has started discussions with government and bourses.
“We are in touch with Ministry of Corporate Affairs... we are also in discussion with them as to what steps need to be taken from the perspective of power they have under the law and SEBI has under the law,” Sebi Chairman C B Bhave said.
SEBI was also forwarded the letter written by Satyam’s chairman Ramalinga Raju on his stepping down with the confession that the profits in the company were inflated over the years, leading to wide gap between real and imaginary assets.
Bhave said the development would have serious implications for the market. Jurisdictions in this case lies with various authorities and accordingly, “we are in touch with Ministry of Corporate Affairs for coordinated action”.
He also emhpasised on the need to go beyond the letter and “decide the course of action.”
Bewildered by the disclosures made by Raju in his letter to Sebi and the Board, which was also sent to stock exchange authorities, Bhave said it was “most surprising” that cash balance that was non-existent got certified. The case also raises the issue of “authenticity of accounts” that have been audited.
“Our main effort is to see that whatever facts are available with any regulatory agency, those are put out and investors know the truth... I am sure we will have to learn few lessons from this as we get through the facts,” he said.
“We are also in touch with stock exchanges to see what will be the appropriate action,” he said.
Asked about the action that the company, also listed in New York Stock Exchange, could face in the US, Bhave said: “This is probably not the time when SEC would be available. My guess is that Satyam will have to make similar disclosures there as well. I am not entirely familiar with their law with regard to areas as to what actions they would be taking.”
Commenting on the unfolding development that began with the fiasco of the USD 1.6 billion dollar acquisition of two Maytas firms promoted by Raju’s family, he said: “This is an event of horrifying magnitude and it’s first of its kind.”
On whether Sebi would be making a special request to the Satyam Board that is to meet on 10 January, he said all these things are being considered and it is being made sure that the Ministry of Corporate Affairs and Sebi act in coordination on this matter.
Wednesday, January 7, 2009
Satyam chief Raju resigns, says profits inflated
The chairman of embattled Satyam Computer Services resigned on Wednesday and said the company’s profits had been inflated over the last several years, sending the stock down 60%.
The shocking revelation comes after India’s fourth-largest outsourcer’s botched attempt last month to buy two construction firms in which the company’s founders held stakes and key customer World Bank dropping its ties with the outsourcing company.
“The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years,” Satyam Chairman Ramalinga Raju said in a statement to stock exchanges on Wednesday.
Satyam’s woes make it one of India’s most high-profile company scandals in recent years. The comments from Satyam sent Indian equity markets in a tailspin, with Bombay’s main benchmark index falling 3.9%.
Raju has written: “It is with deep regret and tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice: The Balance Sheet carries as of 30 September, 2008, a) Inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books); b) An accrued interest of Rs 376 crore, which is non-existent.
Satyam, which specialises in business software and back-office services for clients such as General Electric, and Nestle, was due to hold a board meeting on 10 January to consider a buyback following a rash of broker downgrades even after the acquisitions were called off.
“I think there is no future for this stock. This case for India is similar to what happened to Enron in the US,” said Jigar Shah, senior vice-president at Kim Eng Securities.
“It will not stop at Satyam. Many more companies will come into scrutiny like that. There is a strong possibility investments in India will be affected,” he said.
Raju has admitted that the Maytas acquisition deal was the promoters’ last attempt to fill the gaps on company’s balance sheets.
“I sincerely apologise to all Satyamites and stakeholders, who have made Satyam a special organisation, for the current situation,” B Ramalinga Raju said in a notice sent to the stock exchanges.
“I am now prepared to subject myself to the laws of the land and face consequences thereof,” Raju said.
He will continue in the position till the company’s board is expanded, according to a statement sent to BSE. Meanwhile, Ram Myanpati will act as interim CEO.
Also while Raju recommended DSP Merrill Lynch be entrusted the task of “quickly exploring some merger opportunities,” the company informed the stock exchanges that the investment banker has terminated its engagement with Satyam
The shocking revelation comes after India’s fourth-largest outsourcer’s botched attempt last month to buy two construction firms in which the company’s founders held stakes and key customer World Bank dropping its ties with the outsourcing company.
“The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years,” Satyam Chairman Ramalinga Raju said in a statement to stock exchanges on Wednesday.
Satyam’s woes make it one of India’s most high-profile company scandals in recent years. The comments from Satyam sent Indian equity markets in a tailspin, with Bombay’s main benchmark index falling 3.9%.
Raju has written: “It is with deep regret and tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice: The Balance Sheet carries as of 30 September, 2008, a) Inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books); b) An accrued interest of Rs 376 crore, which is non-existent.
Satyam, which specialises in business software and back-office services for clients such as General Electric, and Nestle, was due to hold a board meeting on 10 January to consider a buyback following a rash of broker downgrades even after the acquisitions were called off.
“I think there is no future for this stock. This case for India is similar to what happened to Enron in the US,” said Jigar Shah, senior vice-president at Kim Eng Securities.
“It will not stop at Satyam. Many more companies will come into scrutiny like that. There is a strong possibility investments in India will be affected,” he said.
Raju has admitted that the Maytas acquisition deal was the promoters’ last attempt to fill the gaps on company’s balance sheets.
“I sincerely apologise to all Satyamites and stakeholders, who have made Satyam a special organisation, for the current situation,” B Ramalinga Raju said in a notice sent to the stock exchanges.
“I am now prepared to subject myself to the laws of the land and face consequences thereof,” Raju said.
He will continue in the position till the company’s board is expanded, according to a statement sent to BSE. Meanwhile, Ram Myanpati will act as interim CEO.
Also while Raju recommended DSP Merrill Lynch be entrusted the task of “quickly exploring some merger opportunities,” the company informed the stock exchanges that the investment banker has terminated its engagement with Satyam
Rupee ends flat ends at 48.66
The Indian Rupee on Jan 6 closed almost flat after spending most of the day in a tight range. The rupee for most of the day moved in a narrow 48.55-48.79 band and ended at 48.66/69 per dollar from Monday''s close of 48.56/58.
Godrej Consumer fixes Record Date for third interim dividend
Godrej Consumer Products Ltd has informed that January 30, 2009 has been fixed as the Record Date for the purpose of payment of third interim dividend for the financial year 2008-09, if declared.
Nava Bharat - Update on Buy Back Offer
JM Financial Consultants Pvt. Ltd (Manager to the Buy Back) on behalf of Nava Bharat Ventures Ltd (Target Company), has issued this Corrigendum to the Public Announcement for Buy back of equity shares, to the Shareholders / Beneficial Owners of the Equity Shareholder of Target Company, which is in continuation of & should be read in conjunction with the PA dated December 22, 2008 Published on December 23, 2008, is in compliance with the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998 (the Regulations), as amended. The shareholders of Target Company are requested to note the following developments / amendments with respect to and in connection with the PA.
The terms and abbreviations used in this Corrigendum have the same meaning as ascribed to them in the PA, unless otherwise specified.
The following modifications / changes have been made to the PA.
Point 1.1 has been modified as
The Target Company hereby announces the Buy-back of its fully paid-up equity shares of the face value Rs. 2 each (Equity Shares) from the open market using the electronic trading facilities of the Bombay Stock Exchange Ltd (BSE) and the National Stock Exchange of India Ltd (NSE) in accordance with the provisions of Sections 77A, 77AA and 77B of the Companies Act, 1956 (the Act) and the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998 (the Buy-Back Regulations) for a minimum of 735,295 Equity Shares (Minimum Offer Shares) and a maximum of 5,000,000 Equity Shares (Maximum Offer Shares) at a price not exceeding Rs. 170 per Equity Share (Maximum Offer Price) payable in cash, for an aggregate amount not exceeding Rs. 5,000 lakhs (Maximum Offer Size) from the existing owners of Equity Shares (the Buy-back) other than those who are promoters, promoter group, directors of promoters, persons in control, persons acting in concert holding Equity shares of Company. The Maximum Offer Size represents 6.29% of the aggregate of the Companys total paid-up equity capital and free reserves as on March 31, 2008.
Point 1.4 has been modified as
The Company shall place buy orders so long as the price is below the Maximum Offer Price and the Buyback will close in terms with the timetable mentioned herein. However, it is being clarified that the Company shall have the flexibility to close the Buy-back at an earlier date in the event the Minimum Offer Shares have been purchased.
The fact that the Board Resolution provides for the Maximum Offer Price does not indicate that the Company will or is obliged to buy or continue to buy Equity Shares, so long as the market price is below the Maximum Offer Price. Similarly, the fact that this announcement mentions the Maximum Offer Size and Maximum Offer Shares that may be bought back at a price per Equity Share not exceeding Rs. 170 per share does not indicate that the Company will utilize or is obliged to utilize, the entire amount of Rs. 5,000 Lakhs (being the Maximum Offer Size) in the Buy-back or that the Company will buy or is obliged to buy all the Maximum Offer Shares.
Point 1.5 has been modified as
Further, the maximum number of Equity Shares bought back shall be subject to (i) the Buy-back not causing the Company to be in violation of the conditions for continuous listing prescribed in terms of Clause 40A of the listing agreement between the Company and the Stock Exchanges (ii) the aggregate consideration payable pursuant to the Buy-back not exceeding the Maximum Offer Size and (iii) the number of shares to be bought back not exceeding Maximum Offer Shares.
Point 12.7 has been modified as
It may be noted that all the equity shares bought back by the Company may not be at a uniform price. The Company will place buy order at least once a week and such order will be placed both in odd lot as well as the normal trading segments of the Stock Exchanges, as applicable.
The terms and abbreviations used in this Corrigendum have the same meaning as ascribed to them in the PA, unless otherwise specified.
The following modifications / changes have been made to the PA.
Point 1.1 has been modified as
The Target Company hereby announces the Buy-back of its fully paid-up equity shares of the face value Rs. 2 each (Equity Shares) from the open market using the electronic trading facilities of the Bombay Stock Exchange Ltd (BSE) and the National Stock Exchange of India Ltd (NSE) in accordance with the provisions of Sections 77A, 77AA and 77B of the Companies Act, 1956 (the Act) and the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998 (the Buy-Back Regulations) for a minimum of 735,295 Equity Shares (Minimum Offer Shares) and a maximum of 5,000,000 Equity Shares (Maximum Offer Shares) at a price not exceeding Rs. 170 per Equity Share (Maximum Offer Price) payable in cash, for an aggregate amount not exceeding Rs. 5,000 lakhs (Maximum Offer Size) from the existing owners of Equity Shares (the Buy-back) other than those who are promoters, promoter group, directors of promoters, persons in control, persons acting in concert holding Equity shares of Company. The Maximum Offer Size represents 6.29% of the aggregate of the Companys total paid-up equity capital and free reserves as on March 31, 2008.
Point 1.4 has been modified as
The Company shall place buy orders so long as the price is below the Maximum Offer Price and the Buyback will close in terms with the timetable mentioned herein. However, it is being clarified that the Company shall have the flexibility to close the Buy-back at an earlier date in the event the Minimum Offer Shares have been purchased.
The fact that the Board Resolution provides for the Maximum Offer Price does not indicate that the Company will or is obliged to buy or continue to buy Equity Shares, so long as the market price is below the Maximum Offer Price. Similarly, the fact that this announcement mentions the Maximum Offer Size and Maximum Offer Shares that may be bought back at a price per Equity Share not exceeding Rs. 170 per share does not indicate that the Company will utilize or is obliged to utilize, the entire amount of Rs. 5,000 Lakhs (being the Maximum Offer Size) in the Buy-back or that the Company will buy or is obliged to buy all the Maximum Offer Shares.
Point 1.5 has been modified as
Further, the maximum number of Equity Shares bought back shall be subject to (i) the Buy-back not causing the Company to be in violation of the conditions for continuous listing prescribed in terms of Clause 40A of the listing agreement between the Company and the Stock Exchanges (ii) the aggregate consideration payable pursuant to the Buy-back not exceeding the Maximum Offer Size and (iii) the number of shares to be bought back not exceeding Maximum Offer Shares.
Point 12.7 has been modified as
It may be noted that all the equity shares bought back by the Company may not be at a uniform price. The Company will place buy order at least once a week and such order will be placed both in odd lot as well as the normal trading segments of the Stock Exchanges, as applicable.
BSEL Infrastructure - Sale of Stake from Hotel Project at Balewadi, Pune
BSEL Infrastructure Realty Ltd has informed that the company has made exit from B W
Highway Star Hotel project at Balewadi, Pune. The Company, having 2,000,000 Shares representing approximately 17% shares of the B W Highway Star Pvt. Ltd. - SPV incorporated in Joint Venture for the project. The Company has sold 1,058,824 Shares of Rs 10/- each in favour of Kamat Hotels (India) Ltd for Rs 79,411,800/- and rest 941,176 Shares of Rs 10/- each to Unity Realty and Developers Ltd (subsidiary of Unity Infraprojects Ltd) for Rs
70,588,200/-.
The project being developed by the Company in the Joint Venture with Unity Infraprojects Ltd and Kamat Hotel (India) Ltd. Clearwater Capital Pvt Ltd, Cyprus is a major shareholder of the SPV Company.
Highway Star Hotel project at Balewadi, Pune. The Company, having 2,000,000 Shares representing approximately 17% shares of the B W Highway Star Pvt. Ltd. - SPV incorporated in Joint Venture for the project. The Company has sold 1,058,824 Shares of Rs 10/- each in favour of Kamat Hotels (India) Ltd for Rs 79,411,800/- and rest 941,176 Shares of Rs 10/- each to Unity Realty and Developers Ltd (subsidiary of Unity Infraprojects Ltd) for Rs
70,588,200/-.
The project being developed by the Company in the Joint Venture with Unity Infraprojects Ltd and Kamat Hotel (India) Ltd. Clearwater Capital Pvt Ltd, Cyprus is a major shareholder of the SPV Company.
Winsome Textile - Implementation of Power Project of the Company
Winsome Textile Industries Ltd has informed that as a step towards cost effectiveness, the Company undertook Mini Hydro Power Project near Dharamshala in Himachal Pradesh with total power potential of 2500 KW. All Project clearances have been taken by the Company.
Infrastructure work i.e. construction of approach road to power house has already been completed. Bid processing and award of works is in progress.
Infrastructure work i.e. construction of approach road to power house has already been completed. Bid processing and award of works is in progress.
Pre market 07 Jan 2009
The market may extend strong gains of the past few days on firm Asian stocks, resumption of buying by foreign funds and on reports that state run banks are likely cut lending rates further next month. But concerns about Q3 results may keep a lid on prices.
Asia-Pacific stocks extended recent gains on Wednesday, 7 January 2009, on hopes for a US economic stimulus package. Key benchmark indices in Japan, Hong Kong, Singapore, South Korea, Australia and Taiwan were up by between 0.07% to 1.89%
US stocks gained on Tuesday, 6 January 2009, on the increased likelihood of a government stimulus package after the release of minutes from the last Federal Reserve policy meeting painted a dismal picture of the US economy. The Dow Jones industrial average was up 62.21 points, or 0.69%, to 9,015.10. The Standard & Poor's 500 Index gained 7.25 points, or 0.78%, to 934.70. The Nasdaq Composite Index added 24.35 points, or 1.5%, to 1,652.38.
US President-elect Barack Obama's proposed package of spending and tax-cut measures is estimated at nearly $775 billion over the next two years.
Closer home, foreign institutional investors (FIIs) have resumed buying. As per provisional data released by the stock exchanges after trading hours, foreign funds on Tuesday, 6 January 2009, bought shares worth a net Rs 374.02 crore. Foreign funds had bought shares worth a net Rs 530 crore in three trading sessions from 1 January 2009 to 5 January 2009. After a sustained inflows earlier in the month in December 2008, FIIs had turned sellers towards end of that month.
Coordinated policy measures from the central bank and the government to boost sagging growth has boosted the bourses. The BSE Sensex jumped 1,007.01 points or 10.79% to 10,335.93 on 6 January 2009 from a recent low of 9,328.92 on 26 December 2008.
The Reserve Bank of India (RBI) on Friday, 5 January 2009, cut the repo rate and the reverse repo rate by 100 basis points each, with immediate effect. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks. After the latest cuts, the repo rate is now at 5.5% and the reverse repo is now at 4%, the lowest ever.
The RBI also announced a cut in cash reserve ratio, the proportion of deposits banks must keep with the central bank, by 50 basis points to 5% with effect from 17 January 2009. Lower interest rates may revive the domestic economy which has been slowing faster than expected due to high interest rates and the global financial crisis.
Complementing monetary easing by the RBI, the government enhanced the spending power of states with specific measures to boost credit availability in the second fiscal stimulus package. It offered additional sops to exporters and the small-scale sector, besides raising the level of protection for cement and steel sectors a tad. It has also incentivised purchase of commercial vehicles. Both the RBI and the government measures were announced after trading hours on Friday, 2 January 2009.
Asia-Pacific stocks extended recent gains on Wednesday, 7 January 2009, on hopes for a US economic stimulus package. Key benchmark indices in Japan, Hong Kong, Singapore, South Korea, Australia and Taiwan were up by between 0.07% to 1.89%
US stocks gained on Tuesday, 6 January 2009, on the increased likelihood of a government stimulus package after the release of minutes from the last Federal Reserve policy meeting painted a dismal picture of the US economy. The Dow Jones industrial average was up 62.21 points, or 0.69%, to 9,015.10. The Standard & Poor's 500 Index gained 7.25 points, or 0.78%, to 934.70. The Nasdaq Composite Index added 24.35 points, or 1.5%, to 1,652.38.
US President-elect Barack Obama's proposed package of spending and tax-cut measures is estimated at nearly $775 billion over the next two years.
Closer home, foreign institutional investors (FIIs) have resumed buying. As per provisional data released by the stock exchanges after trading hours, foreign funds on Tuesday, 6 January 2009, bought shares worth a net Rs 374.02 crore. Foreign funds had bought shares worth a net Rs 530 crore in three trading sessions from 1 January 2009 to 5 January 2009. After a sustained inflows earlier in the month in December 2008, FIIs had turned sellers towards end of that month.
Coordinated policy measures from the central bank and the government to boost sagging growth has boosted the bourses. The BSE Sensex jumped 1,007.01 points or 10.79% to 10,335.93 on 6 January 2009 from a recent low of 9,328.92 on 26 December 2008.
The Reserve Bank of India (RBI) on Friday, 5 January 2009, cut the repo rate and the reverse repo rate by 100 basis points each, with immediate effect. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks. After the latest cuts, the repo rate is now at 5.5% and the reverse repo is now at 4%, the lowest ever.
The RBI also announced a cut in cash reserve ratio, the proportion of deposits banks must keep with the central bank, by 50 basis points to 5% with effect from 17 January 2009. Lower interest rates may revive the domestic economy which has been slowing faster than expected due to high interest rates and the global financial crisis.
Complementing monetary easing by the RBI, the government enhanced the spending power of states with specific measures to boost credit availability in the second fiscal stimulus package. It offered additional sops to exporters and the small-scale sector, besides raising the level of protection for cement and steel sectors a tad. It has also incentivised purchase of commercial vehicles. Both the RBI and the government measures were announced after trading hours on Friday, 2 January 2009.
Oil steady under $49, eyes US inventory
Oil was steady under $49 on Wednesday, after weak US economic data sparked a bout of profit-taking overnight, outweighing escalating tensions in the Middle East and widening supply cuts from the Russian gas row.
The market will be watching for weekly inventory data from the US energy department due later on Wednesday, which are forecast to show a jump in stockpiles, and US December employment data, to be released on Friday.
“The EIA weekly inventory numbers and the U.S. unemployment data will be key for near-term price direction,” said Jim Ritterbusch, president of Ritterbusch & Associates.
US crude for February delivery was up 6 cents a barrel at $48.64 by 8:30am, while London Brent was up 7 cents at $50.60.
Data released on Tuesday showed that pending sales of US homes dropped in November to their lowest level in at least seven years and that the country’s services sector shrank for the third consecutive month in December.
A report from the US Energy Information Administration due later is likely to show fuel stocks rising as demand slows, with crude oil inventories seen up 900,000 barrels last week, and distillates and gasoline supplies also expected to have increased.
Further clues about future demand from the world’s largest oil consumer will come when US Labour Department unveils December non-farm payroll and unemployment data on Friday.
Oil prices have risen nearly 50% since the intraday low of $32.40 reached on 19 December, boosted by worries over supply disruptions from Israel’s deepening incursion into Gaza, Russia’s gas row with Ukraine, and mounting evidence of Opec’s compliance with production cuts.
Israel and Hamas studied a proposal by Egypt for a ceasefire in the Gaza Strip on Wednesday that won immediate backing from the United States and Europe.
But Israeli officials also said ministers would discuss a major escalation of their 12-day-old offensive that would push troops deep inside Gaza’s cities and refugee camps in their bid to end rocket fire into Israel by Islamist militant groups.
While the conflict does not directly threaten any oil supplies, unrest in the Middle East can bolster prices because countries in the region pump about a third of the world’s oil.
Also adding support was Russia’s deepening dispute with Ukraine over natural gas prices, which triggered supply disruptions to parts of Europe. This echoed a similar spat three years ago that raised questions about Russia’s reliability as an energy exporter. Evidence of Opec members implementing the group’s biggest ever output cuts also grew on Tuesday as Kuwait and Iran told customers of bigger supply curbs this month in a bid to prop up prices.
The producer cartel has cut output three times since September, in a bid to halt the market’s slide.
But analysts said oil’s rally was likely to be short-lived, especially once the February contract expires later this month.
The market will be watching for weekly inventory data from the US energy department due later on Wednesday, which are forecast to show a jump in stockpiles, and US December employment data, to be released on Friday.
“The EIA weekly inventory numbers and the U.S. unemployment data will be key for near-term price direction,” said Jim Ritterbusch, president of Ritterbusch & Associates.
US crude for February delivery was up 6 cents a barrel at $48.64 by 8:30am, while London Brent was up 7 cents at $50.60.
Data released on Tuesday showed that pending sales of US homes dropped in November to their lowest level in at least seven years and that the country’s services sector shrank for the third consecutive month in December.
A report from the US Energy Information Administration due later is likely to show fuel stocks rising as demand slows, with crude oil inventories seen up 900,000 barrels last week, and distillates and gasoline supplies also expected to have increased.
Further clues about future demand from the world’s largest oil consumer will come when US Labour Department unveils December non-farm payroll and unemployment data on Friday.
Oil prices have risen nearly 50% since the intraday low of $32.40 reached on 19 December, boosted by worries over supply disruptions from Israel’s deepening incursion into Gaza, Russia’s gas row with Ukraine, and mounting evidence of Opec’s compliance with production cuts.
Israel and Hamas studied a proposal by Egypt for a ceasefire in the Gaza Strip on Wednesday that won immediate backing from the United States and Europe.
But Israeli officials also said ministers would discuss a major escalation of their 12-day-old offensive that would push troops deep inside Gaza’s cities and refugee camps in their bid to end rocket fire into Israel by Islamist militant groups.
While the conflict does not directly threaten any oil supplies, unrest in the Middle East can bolster prices because countries in the region pump about a third of the world’s oil.
Also adding support was Russia’s deepening dispute with Ukraine over natural gas prices, which triggered supply disruptions to parts of Europe. This echoed a similar spat three years ago that raised questions about Russia’s reliability as an energy exporter. Evidence of Opec members implementing the group’s biggest ever output cuts also grew on Tuesday as Kuwait and Iran told customers of bigger supply curbs this month in a bid to prop up prices.
The producer cartel has cut output three times since September, in a bid to halt the market’s slide.
But analysts said oil’s rally was likely to be short-lived, especially once the February contract expires later this month.
Bharati up on Great Offshore share pledge
Shares of Bharati Shipyard Ltd rose nearly 10% while Great Offshore Ltd was up as much as 6.7% on Tuesday after the latter’s founder pledged more shares with a Bharati unit, triggering talk of a likely open offer.
Great Offshore founder and managing director Vijay Sheth pledged an additional 2.15% on 2 January, a stock exchange notice late on Monday showed, taking the total amount pledged with two Bharati Shipyard units since December to 14.87%.
Sheth, who owns 15.73% of Great Offshore, pledged the shares for a loan of about Rs200 crore, a spokesman for shipbuilder Bharati said.
Dealers said the shares rose amid speculation the transaction exposed Great Offshore to a takeover bid if the loan is not repaid, but analysts doubted whether Bharati had the resources for such a move.
“I don’t think they can go for an open offer because they don’t have that kind of cash,” a Mumbai-based analyst, who didn’t want to be named, said.
“The open offer, if at all, would come in at Rs360 or so, and they don’t have that kind of money to buy another 20% in the company.” Indian takeover regulations require an open offer to be made if 15% of a company’s shares are acquired by someone else.
The Daily News and Analysis newspaper on Tuesday quoted the managing director of Bharati Shipyard, P.C. Kapoor, as saying an open offer could not be ruled out if the loan was not repaid, though no such decision had been taken.
Reuters was unable to reach Kapoor. But a Bharati spokesman said talk of a takeover was speculative at this stage.
“This happened because the promoters are very close to each other and there are good business interests,” the Bharati spokesman said, referring to the loan against shares.
Bharati Shipyard has about $230 million (Rs1,120 crore) worth of orders from Great Offshore for a rig due for delivery in May next year and a multi-purpose supply vessel to be delivered in September.
“Out of this, as of 30 September, already $105 million has been advanced towards the orders,” Great Offshore’s spokesman said.
Media reports said Sheth’s 15.73% stake had earlier been pledged with creditors, including IL&FS and Motilal Oswal in June 2007, but he came under pressure following a plunge in the shares of Great Offshore, prompting the move to borrow from Bharati.
Dealers said the acquisition would be beneficial for Bharati Shipyard as Great Offshore is an asset-rich firm.
“Great Offshore is a good company to have in your portfolio. There’s good amount of value in the company but it would be slightly heavy for Bharati’s balance sheet,” another analyst said.
Shares of both companies came off highs as the market eased.
Bharati Shipyard’s shares were up 5.41% at Rs84.75 while Great Offshore shares were down 1.54% at Rs274.60 at close on the Bombay Stock Exchange on Tuesday.
Great Offshore founder and managing director Vijay Sheth pledged an additional 2.15% on 2 January, a stock exchange notice late on Monday showed, taking the total amount pledged with two Bharati Shipyard units since December to 14.87%.
Sheth, who owns 15.73% of Great Offshore, pledged the shares for a loan of about Rs200 crore, a spokesman for shipbuilder Bharati said.
Dealers said the shares rose amid speculation the transaction exposed Great Offshore to a takeover bid if the loan is not repaid, but analysts doubted whether Bharati had the resources for such a move.
“I don’t think they can go for an open offer because they don’t have that kind of cash,” a Mumbai-based analyst, who didn’t want to be named, said.
“The open offer, if at all, would come in at Rs360 or so, and they don’t have that kind of money to buy another 20% in the company.” Indian takeover regulations require an open offer to be made if 15% of a company’s shares are acquired by someone else.
The Daily News and Analysis newspaper on Tuesday quoted the managing director of Bharati Shipyard, P.C. Kapoor, as saying an open offer could not be ruled out if the loan was not repaid, though no such decision had been taken.
Reuters was unable to reach Kapoor. But a Bharati spokesman said talk of a takeover was speculative at this stage.
“This happened because the promoters are very close to each other and there are good business interests,” the Bharati spokesman said, referring to the loan against shares.
Bharati Shipyard has about $230 million (Rs1,120 crore) worth of orders from Great Offshore for a rig due for delivery in May next year and a multi-purpose supply vessel to be delivered in September.
“Out of this, as of 30 September, already $105 million has been advanced towards the orders,” Great Offshore’s spokesman said.
Media reports said Sheth’s 15.73% stake had earlier been pledged with creditors, including IL&FS and Motilal Oswal in June 2007, but he came under pressure following a plunge in the shares of Great Offshore, prompting the move to borrow from Bharati.
Dealers said the acquisition would be beneficial for Bharati Shipyard as Great Offshore is an asset-rich firm.
“Great Offshore is a good company to have in your portfolio. There’s good amount of value in the company but it would be slightly heavy for Bharati’s balance sheet,” another analyst said.
Shares of both companies came off highs as the market eased.
Bharati Shipyard’s shares were up 5.41% at Rs84.75 while Great Offshore shares were down 1.54% at Rs274.60 at close on the Bombay Stock Exchange on Tuesday.
LyondellBasell filed for bankruptcy
The US operations of LyondellBasell, the world’s third-largest petrochemical company, filed for bankruptcy protection under the weight of a massive debt load and slumping demand for its products.
The company had taken on billions of dollars in debt obligations a year ago, when billionaire Len Blavatnik led a $12.7 billion leveraged buyout of US firm Lyondell by Basell of the Netherlands.
The New York bankruptcy filing on Tuesday included almost 80 units of the company and encompassed its US operations and a European financing arm. The company’s non-US operations are not included in the Chapter 11 bankruptcy and are continuing to operate as usual.
LyondellBasell Industries, whose products range from fuels to chemicals and plastics, is owned by the Russian- born Blavatnik through New York-based Access Industries and is based in the Netherlands.
The US operations have obtained $8 billion in debtor-in-possession financing to help fund operations, including $750 million from Access Industries.
The privately held company, which operates a massive refining and processing plant in Houston, has suffered from plunging demand for chemicals as industries such as autos, housing and electronics weakened. Tight credit markets have made renegotiating debt difficult.
The company is not alone in its struggles.
“We’re getting back to the kind of scenario that played out earlier this decade when we had five or six defaults per year,” said Kyle Loughlin, analyst with Standard & Poor’s.
Among LyondellBasell’s largest creditors were Venezuelan oil company Petroleos de Venezuela (PDVSA), Algerian energy group Sonatrach, Exxon Mobil Corp and Dow Chemical Co.
LyondellBasell’s lenders include Merrill Lynch, Goldman Sachs Group Inc, Citigroup Inc, ABN AMRO and UBS Securities LLC, according to filings.
LyondellBasell, which employs 17,000 workers and had revenue of $44.7 billion in 2007, has seen its liquidity drop to $639 million currently from $1.67 billion at the end of the third quarter, falling short of its quarterly interest and maintenance costs.
Its products are used in numerous products including fuels, rigid and flexible packaging, plastic pipe, detergents, cosmetics, electronics and appliances.
The bankruptcy filing was made in the US Bankruptcy Court for the Southern District of New York.
The company had taken on billions of dollars in debt obligations a year ago, when billionaire Len Blavatnik led a $12.7 billion leveraged buyout of US firm Lyondell by Basell of the Netherlands.
The New York bankruptcy filing on Tuesday included almost 80 units of the company and encompassed its US operations and a European financing arm. The company’s non-US operations are not included in the Chapter 11 bankruptcy and are continuing to operate as usual.
LyondellBasell Industries, whose products range from fuels to chemicals and plastics, is owned by the Russian- born Blavatnik through New York-based Access Industries and is based in the Netherlands.
The US operations have obtained $8 billion in debtor-in-possession financing to help fund operations, including $750 million from Access Industries.
The privately held company, which operates a massive refining and processing plant in Houston, has suffered from plunging demand for chemicals as industries such as autos, housing and electronics weakened. Tight credit markets have made renegotiating debt difficult.
The company is not alone in its struggles.
“We’re getting back to the kind of scenario that played out earlier this decade when we had five or six defaults per year,” said Kyle Loughlin, analyst with Standard & Poor’s.
Among LyondellBasell’s largest creditors were Venezuelan oil company Petroleos de Venezuela (PDVSA), Algerian energy group Sonatrach, Exxon Mobil Corp and Dow Chemical Co.
LyondellBasell’s lenders include Merrill Lynch, Goldman Sachs Group Inc, Citigroup Inc, ABN AMRO and UBS Securities LLC, according to filings.
LyondellBasell, which employs 17,000 workers and had revenue of $44.7 billion in 2007, has seen its liquidity drop to $639 million currently from $1.67 billion at the end of the third quarter, falling short of its quarterly interest and maintenance costs.
Its products are used in numerous products including fuels, rigid and flexible packaging, plastic pipe, detergents, cosmetics, electronics and appliances.
The bankruptcy filing was made in the US Bankruptcy Court for the Southern District of New York.
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