Sterlite, Indal in slanging match

It attacked the "professional" management of Indal, which has come out openly in support of the company’s largest multinational shareholder, Alcan. Sterlite said: "Indal has failed in several fronts. It is claimed that the Indal is managed professionally. It is, therefore, intriguing to see the involvement of theso-called professional management in what essentially is a contest between two bidders trying to acquire shares of the company. A large section of Indal’s unions are dissatisfied with the present management and has openly stated its desire for a change."

"Certain vested interests have deliberately tried to confuse the Indal shareholders by raising baseless issues in public." Alcan has offered Rs 175 per share for a 20 per cent stake in Indal while Sterlite has offered Rs 221 for 51 per cent stake.

On Friday, Indal had said Sterlite has proceeded with an offer of preference capital to shareholders without adequate authorised capital. The authorised capital of the company is Rs 110 crore, which is being raised to Rs 410 crore at its forthcoming Extraordinary General Meeting scheduled for June 12.

Indal has also written to the Sebi and the FIs pointing out that the Sterlite board does not have the power to offer new shares in its own company to Indal shareholders when these shares have not been "created"yet.

Alcan has said Eastern Galvanising, the Sterlite associate with which Sterlite has jointly made the takeover bid on Indal, cannot issue shares of Sterlite since these are not their own shares. Sterlite has already been accused by Alcan of constant changes in objectives of the open offer, from February to May it has changed from 10, to 20, to 52.03 per cent now.

It has also said that the takeover code does not permit any change in the mode of payment from cash to part cash-plus-preference shares.

Alcan has also alleged that Sterlite does not have the authority and permission from its shareholders and the central government as required under Section 372 under the Companies Act to offer to invest in Indal’s equity in excess of 30 per cent of its equity and free reserves (in fact, Sterlite proposes to pump in, according to some calculations, around 80 per cent of its net worth).

In response, Sterlite added that it would obtain the requisite approvals to increase its authorised capital made necessaryby its offer to make part payment towards acquisition of shares of Indal through the issue of preference shares.

Sterlite said that attempts are being made to mislead the GDR holders that they cannot participate in the open offer. It, therefore, clarified that holders of Indal GDRs can also participate in Sterlite’s revised offer and receive optionally convertible preference shares (OCPS), for which necessary approvals would be obtained subsequently.

Sterlite said the revised bid hiking the offer from 20 per cent to 52 per cent had not in any way changed the objective of the open offer and Sterlite would "endeavour to establish a long term relationship of mutual benefit with Indal and not dispose of assets of the Indal."

Alcan’s chief financial officer, Suresh Thadhani, in a last ditch effort to checkmate Sterlite Industries’ bid for a 52 per cent stake in Indal, is slated to reach Mumbai on June 1, the day before the offer closes.

Both Sterlite and Alcan are in hectic parleys with shareholders ofIndal. With the FIs yet to decide, Sterlite appears to be pretty confident of clinching a deal with them. The cash offer of Rs 131 along with the conversion of optionally convertible redeemable preference shares happens to pay a lucrative yield.