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MUMBAI:Shares of New Delhi Television (NDTV) were locked in the 10 per cent lower circuit on Tuesday after Vishvapradhan Commercial Private Ltd (VCPL), which was asked by the market regulator Sebi to make an open offer to NDTV shareholders at the stock price of 2009, said that they will challenge the order in Securities Appellate Tribunal (SAT).
A lawyer representing VCPL confirmed it will challenge the Sebi order.
NDTV shares rallied 74 per cent in the four trading sessions till Monday after the market regulator ordered VCPL to make an open offer for giving a loan of ₹350 crore in July 2009 to the promoters of NDTV against warrants in RRPR, the NDTV promoter company which conferred upon it the right to convert those warrants into 99.99 per cent of the equity share capital of RRPR.
The share price of NDTV on July 21, 2009 was ₹127 while the average price of the previous six months was ₹110.
VCPL had told the regulator that it had sourced the loan from Reliance Strategic Investment Ltd, a whollyowned subsidiary of Reliance Industries.
Reliance Industries no longer owns the firm, which is currently owned by the Nahata group.
Sebi directed VCPL to make an open offer within 45 days to acquire shares of NDTV with 10 per cent interest to all shareholders who owned the shares of the media company when the stake was bought over.
“The stock rallied on expectations that the Sebi order will compel VCPL to give an open offer to NDTV shareholders at 2009 price,” said Phani Shekhar, fund manager, Karvy Capital.
The stock price of NDTV was ₹32.50 when the Sebi order came on June 26.
On Tuesday, the stock closed at ₹50.90.
Securities law experts said the loan agreement date is supposed to be the date when control changed.
“The open offer price would be contemporaneous price,” said a lawyer.
In 2008, an open offer was made by the promoters of NDTV (RRPR Holding, Prannoy Roy and Radhika Roy).
For this purpose, the promoters availed of a loan of ₹540 crore from Indiabulls Financial Services.
To repay the this loan, another loan of ₹375 crore was taken from ICICI Bank.
This loan was repaid in 2009 by taking another loan of ₹350 crore from VCPL through a loan agreement which was executed on July 21, 2009.
VCPL also obtained a call option in respect of shares that RRPR held in NDTV.
All of these shareholding rights were further buttressed by veto rights that VCPL obtained by which several actions could not be carried out by RRPR without the prior approval of VCPL.
“the manner in which the loan agreements and call option agreements were entered into and the subsequent conduct of the noticee (VCPL) do not substantiate its argument that the transaction was only in the nature of a loan.
Instead, it appears that the loan agreement and call option agreements were used to shroud the true nature of the transaction which was acquisition of beneficial interest in NDTV Ltd,” Sebi said in its order.
