The Securities and Exchange Board of India (Sebi) on Tuesday issued an order directing Vishvapradhan Commercial Pvt Ltd (VCPL) to make an open offer within 45 days to acquire shares of NDTV Ltd because it had indirectly acquired a 52 per cent controlling stake in the television company in 2009. The market regulator also directed Vishvapradhan to pay 10 per cent interest along with offer price to shareholders who were holding shares in NDTV when the stake was acquired. Vishvapradhan, according to Sebi, has violated the regulator’s takeover norms, when acquired the stake via a convertible loan of Rs 350 crore given to RRPR, the promoter of NDTV Ltd.
According to the Sebi order, the loan transaction was “not to secure the loan but to acquire control over all the affairs of the Target Company (NDTV) leaving only the right to control the “editorial policies of NDTV” to the Promoters and Borrowers, right from the day of execution of the loan agreement. Thus in my view, the takeover exercise has been conveniently couched as a loan agreement with the predominant intention of the Noticee (Vishvapradhan) being to acquire control over NDTV without contemplating any repayment of the loan, whatsoever, from the Promoters or Borrowers.”
The Sebi order did not go into details of Vishvapradhan’s ownership. However, the regulator observed that the firm had a revenue of only Rs 60,000 in financial year 2017 and Rs 400 crore of long-term loans and advances. It also stated that Vishvapradhan had in a March 25, 2016 letter said that the “source for the loan was the borrowing from Reliance Strategic Investment Ltd, a wholly owned subsidiary of Reliance Industries Ltd.”
In a 28-page order, whole time member G Mahalingam wrote: “ I have perused the documents submitted by the noticee (Vishvapradhan) and in particular the financial statements included in the annual reports of the said companies and do not find that they had any worthwhile history of such lending activity.”
“In the current set of facts and circumstances, it is clear that the noticee and its associate companies had neither the history of advancing such loans nor do they appear to have had the financial wherewithal to advance loans on such liberal terms, “ the Sebi order added. “The elaborate mechanism adopted by the noticee and its associates appear to be solely to deflect attention from this acquisition and thus covetously overcome the obligations imposed by the takeover regulations.” A Reliance spokesperson said that Vishvapradhan doesn’t belong to Reliance Industries anymore. According to the Press Trust of India, Vishvapradhan was sold to the Nahata group by Reliance Industries in 2010.
Sebi said the NDTV promoters had made an open offer in 2008, and had taken a loan of Rs 540 crore from Indiabulls Financial Services Ltd. To repay this loan, another loan of Rs 375 crore was taken from ICICI Bank, which in turn was repaid in 2009 by taking Rs 350 crore loan from Vishvapradhan through an agreement of July 21, 2009.
Sebi said the loan, according to the agreement was an unsecured loan without any interest payment. Sebi said the agreement helped Vishvapradhan to acquire 52 per cent of NDTV shares in two ways — indirect acquisition of convertible warrants of the holding company; and by purchase of a freely exercisable call option to buy 26 per cent shares of NDTV.
Show-cause notice to Roys, RRPR Holding
New Delhi: Sebi is learnt to have issued a show cause notice to the promoters — Prannoy Roy, Radhika Roy and RRPR Holding Pvt Ltd — for non-disclosure of loan agreement with VCPL to the stock exchanges.
A source close to the development told that, “Sebi recently also issued a show cause notice to the promoters of NDTV Ltd from non-disclosure of the loan agreement with VCPL.” An email sent to Prannoy Roy did not elicit any response. —ENS