DLF146;s minority shareholders dispute likely to be settled today

After a six-month war with India8217;s largest real estate developer DLF, around 1,300 minority shareholders are going to end up wealthy.

After a six-month war with India8217;s largest real estate developer DLF, around 1,300 minority shareholders are going to end up wealthy. Less than a year after DLF announced a rights issue of convertible debentures on 21 December 2005, the company has revived the issue for the sake of all its minority shareholders barring 138 who had missed out on it earlier.

The Delhi-based company has issued a letter to all its minority shareholders inviting them to an extra-ordinary general meeting EGM today with a view to offer them 81,983 redeemable debentures fully convertible into 10 equity shares of Rs 10 face value each. Each of these shares will be split into five shares of Rs 2 face value, taking the total number of shares to 50 for each debenture held. On these 50 shares, DLF has offered bonus shares in proportion of seven equity shares for every equity share held.

In effect, each debenture will get converted into 350 shares. Altogether, 81,983 debentures will get converted into 2,86,94,050 shares. In its notice to minority shareholders, the company has said that shareholders can modify or recall its earlier decision regarding lapse of the debentures on 30 January this year.

Tomorrow8217;s meeting could be the end of a long drawn battle between the 1,300-odd minority shareholders and the DLF management over the rights debentures issue. The former had accused the company of mismanagement alleging non receipt of the postal letters intimating the offer. While DLF had stuck to its guns saying that the letters were duly posted in compliance with the norms, minority shareholders had written to capital markets regulator Securities and Exchange Board of India Sebi, listing their grieviances. In turn, Sebi referred the matter to the Ministry of Company Affairs which is still looking into the case. The controversy is believed to be the prime reason for the deferring of DLF8217;s high profile IPO in September.

8220;We are re-offerring the rights debentures issue that had lapsed for the benefit of those who did not avail of it. There is no discrepancy in the current issue and the terms are the same as they were last year,8221; said DLF senior vice president finance Saurabh Chawla.

As reported in The Indian Express earlier, tomorrow8217;s meeting follows an earlier annual general meeting in late September this year when DLF vice chairman Rajiv Singh had assured minority shareholders that their rights would be taken care of. With the controversy out of the way, the stage is set for the company to press ahead with its IPO. DLF had earlier stated that it would file a draft red herring prospectus after settling the minority shareholder tangle.