Financial Daily from THE HINDU group of publications
Tuesday, Sep 03, 2002
SEBI clears Precot buyback
COIMBATORE, Sept. 2
PRECOT Mills Ltd has completed its share buy-back programme following clearance from the Securities and Exchange Board of India last week.
It has bought back 5.5 lakh shares that were offered by 750 public shareholders who had responded to the buy backoffer made in May last.
Precot was formally allowed last week by SEBI to go ahead with its buy-back on condition that the company maintained the non-promoters' holding at a minimum 25 per cent post-buy-back, the company sources told Business Line.
The SEBI clearance follows Precot's representation to the regulator seeking the latter's permission to undertake its buy-back programme. It may be recalled that Precot had to halt its buyback of equities from non-promoter shareholders following a directive to do so from SEBI which felt that the buyback was not in agreement with the provisions of the listing agreement relating to the non-promoters' holding.
SEBI had maintained that Precot should maintain its non-promoters' holding at 60 per cent as was required in 1977 when the company came out with its public issue.
However, Precot in its representation stated that the stipulated 60 per cent public holding referred to related to the minimum public offer size and it was not relevant to the post-issue holding and hence it wanted the board to accord sanction to the buy-back.
Precot Mills sources maintained that it came out with its buy-back programme in June last with a view to providing an exit option to the company's shareholders, in the light of the company's shares being not freely traded. It has now stated that its shares, which are listed on Coimbatore and Chennai stock exchanges would continue to remain listed in these exchanges.
Precot had offered to buy back 10 lakh shares from the public (out of total equity base of 60 lakh shares) at a price quote of Rs 33 per share, but only 750 shareholders involving 5.5 lakh shares accepted the offer.
With the buyback almost gone through now, the non-promoters shareholding including the institutional holdings in Precot which remained at 44 per cent prior to the buyback stands reduced to 39 per cent post buy-back and the share capital too falls to Rs 5.45 crore.
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