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HC asks Modi Rubber to defer offer closing date

Our Bureau

MUMBAI, July 3

THE Bombay High Court has asked Modi Rubber to extend the closing date for its open offer to July 16. The offer was to close on July 3.

The decision comes in the wake of the court's ruling on Monday that the open offer be kept `alive' for another seven days for Modipon, a M.K. Modi company.

According to senior SEBI officials, following shareholder appeal, the Bombay High Court had decided to extend the closing date for the open offer for all categories of investors.

Pursuant to a ruling by the Bombay High Court, the capital markets regulator on Tuesday also held a hearing for Mr M.K. Modi, who was represented by his lawyers.

The court order follows Mr M.K. Modi's writ against a SEBI order rejecting his appeal to include him in the open offer made by the Modi brothers Mr B.K. Modi and Mr V.K. Modi for 35 per cent of MRL equity.

Mr M.K. Modi who holds a little less than 10 per cent of the equity had appealed to SEBI to be allowed to offload his share in the open offer.

SEBI had rejected his appeal on the grounds that Mr M.K.Modi is the promoter and has the option of an `inter se' transfer of shares. The regulator had also argued that the promoters participation in the open offer would reduce public involvement.

Mr M.K. Modi had challenged the SEBI decision saying that the Modi family had split in 1989 and that each member now has his own business.

``The hearing today was held on two accounts. One, to decide whether Mr M.K. Modi should be considered a promoter or not and two, whether he should be allowed to participate in the open offer or not,'' the SEBI Chairman, Mr D.R. Mehta, said. The hearing proved to be inconclusive.

While no specific date has been set for a fresh hearing, SEBI officials said that given that the final order has to be passed before July 16, it would be very soon.

Mr M.K. Modi reportedly holds around 10 per cent in Modi Rubber through Modipon and Modi Spinning.

Our Delhi Bureau reports: Indian financial institutions who control 44 per cent of the equity of Modi Rubber Limited (MRL) are unlikely to budge from their stand of not participating in the open offer made by the Modi Brothers' even though the Mumbai Hig h Court has extended the date of closure of the open offer to July 16.

Sources here and also in Mumbai said the FIs have already made it clear that they are interested in offloading their entire 44 per cent stake in MRL to a prospective buyer. Moreover, the FIs have also been maintaining that the price of Rs 90 per share of fered by the Modi Brothers' did not match their expectation.

They pointed out that an extension of closure date of the open offer has very little bearing on the two aspects of quantum of stake and their price expectations.

Meanwhile, investment banking sources said that ``the financial institutions have not participated in the offer till Tuesday evening when the offer was to have closed. The response from the other public shareholders has not been bad.''