The Hindu Business Line : Bhoruka Fin issue figures in DLF offer document

The issue involving transactions in a small NBFC stock on Magadh Stock Exchange, which recently led to a stricture from the SEBI, has now figured in the offer document filed by real estate major, DLF.

DLF Commercial Developers Ltd (DCDL), a subsidiary of the realty company, had worked out a share purchase agreement with the promoters of Bhoruka Financial Services Ltd (BFSL) to acquire all the shares held by them, representing 98.73 per cent of the BFSL equity capital.

The DLF offer document, which has referred to the share purchase agreement, has mentioned that it was executed after obtaining an exemption from complying with certain provisions of the SEBI's takeover code. The negotiated price per share was Rs 3,000.

"One of the conditions in the said share purchase agreement was that consideration for the shares should be paid through a designated broker of Magadh Stock Exchange Association," it said. DCDL complied with the requirements of the exemption order under the takeover norms and sent offer letters to each of the 26 public shareholders offering them Rs 4,000 per share, a price that was re-negotiated with the sellers.

The SEBI, however, passed an ex parte interim order against the sellers, the exchange and the broker through whom the transactions were effected.

It alleged inter alia that DCDL had violated the takeover regulations and had consciously chosen to execute the trades on MSEA to avoid regulatory attention and to use the exchange to artificially increase the price.

The regulator in its order impounded BFSL shares lying with CDSL (the depository) and prohibited DCDL from dealing in the scrip so long as the directions in the interim order were in force. Later, the SEBI passed an interim order ("impugned order") that confirmed the earlier interim order.

DCDL had filed an appeal against the impugned order before SAT. The latter, by an order dated May 10, had set aside the interim order. It also directed the SEBI to conclude its investigations not later than July 31 while confirming the restraint on DCDL from transferring the shares it had acquired from the sellers.

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Bhoruka Fin issue figures in DLF offer document