Updated: January 10, 2020 4:21:31 pm
Ingovern Research Services, a proxy advisory firm, has called for Sebi to force promoters of Sterling and Wilson Solar (SW Solar) to provide an exit offer to minority shareholders as the promoters failed on their commitment to repay loans to SW Solar from the proceeds of its IPO in August 2019, causing a sharp fall of 60 per cent in share prices of the company from its issue price.
The report released on Thursday states that promoters of SW Solar — a Shapoorji Pallonji (SP) Group firm — did not fulfill their obligations to repay loans amounting to Rs 2,563 crore to SW Solar within 90 days of listing of the company. Through the IPO, the promoters had raised Rs 2,850 crore in August when SW Solar was listed.
The report said while the objects of the offer for sale stated that it would enable “the promoters to repay loans amounting to Rs 2,563 crore to SW Solar within 90 days of listing, the Company has received only Rs 1,000 crore on December 31, 2019, i.e., 133 days after listing.”
The report by Ingovern alleged this non-fulfilment of obligations by the promoters as per the objects of the offer has resulted in a “loss of over 60 per cent in investment value for IPO investors as stock price has fallen from the issue price of Rs 780 to Rs 310 as on January 6, 2020, resulting in a loss of Rs 1,700 crore for public minority shareholders,” and also called for Sebi intervention to protect minority shareholders interest.
Stating that the non-fulfilment of obligations is tantamount to change of objects of the IPO from what was stated in the prospectus and it has resulted in aggrieved minority public shareholders, the report said “SEBI (ICDR) Regulations, 2018 allow for the dissenting shareholders to be provided an exit offer by the promoters, in cases where there is a change in objects of the issue/ offer in the IPO prospectus.”
It further said that Sebi must “force the promoters” to provide an “exit offer to shareholders” at a price as per SEBI (ICDR) Regulations, as shareholders have suffered significant erosion in value of their holdings “solely due to the non-utilisation of funds as per the objects of offer of the IPO.”
An SP Group spokesperson said: “We would like to reiterate that this entire report is malicious, misleading, defamatory and without any attempt to ascertain the facts of the matter from us. The sensationalism in this report is more an attempt to further erode investor wealth rather than its stated objective of working in the interests of the investors.”
Last month, the NCLAT ordered the reinstatement of Cyrus Mistry, one of the promoter shareholders of SW Solar, as the executive chairman of Tata Sons.
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