Sterling, Nadars sign pact on TMB

CHENNAI, JUNE 24: The battle for control of Tamilnad Mercantile Bank TMB is finally at an end. The Nadar Mahajana Bank Share Investors'...

CHENNAI, JUNE 24: The battle for control of Tamilnad Mercantile Bank TMB is finally at an end. The Nadar Mahajana Bank Share Investors8217; Forum today signed an agreement with the Sterling Group of C Sivasankaran by which the former would buy 50.01 per cent stake in the bank for Rs 110 crore. The forum also has the option of purchasing the remaining 17.28 per cent from Sivasankaran for a further Rs 45 crore, failing which financial institutions may be offered the stake.

Initially, the forum would have to make an advance payment of Rs 20 crore to the Sterling group, with the rest being paid before the end of nine months. Interest on delayed payment would be charged at 15 per cent.

The agreement was signed in the city today in the presence of Swadeshi Jagran Manch leader S Gurumurthy and prominent journalist Cho Ramaswamy. While the TMB shares will be held in escrow by forum chairman Ramachandra Adityan, the monies to be paid to Sterling will be held in escrow by Ramaswamy.

Sterling representative ASubramanian and Adityan expressed relief that the parties had reached an agreement after the prolonged and often bitter wrangle. Adityan said that a meeting of the annual general body would be convened prior to changes being made in the composition of the board.

Earlier, the Reserve Bank of India RBI had indicated that it would not be averse to allowing transfer of shares to either party provided they reached an agreement on the controlling stake.

Sivasankaran came into possession of the 67.29 per cent stake in TMB following RBI8217;s refusal to acknowledge transfer of shares to the Ruias of the Essar group. Essar subsequently sold the investment companies that held the shares to the Sterling group.

Negotiations were further complicated because of the monies owed to Sivasankaran by the Essar group. The Ruias were pressing for a higher sale price, to be adjusted for the purchase of Sterling Cellular from Sivasankaran.