PUBLIC ANNOUNCEMENT TO THE SHAREHOLDERS OF SPENTEX INDUSTRIES LIMITED

Transcription

1 PUBLIC ANNOUNCEMENT TO THE SHAREHOLDERS OF SPENTEX INDUSTRIES LIMITED This Public Announcement is being issued by Chartered Capital and Investment Limited, Manager to the Offer on behalf of Mr. Mukund Choudhary, Mr. Kapil Choudhary and Mr. Ajay Kumar Choudhary (jointly called as Acquirers ) pursuant to Regulation 10 read with Regulation 12 of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997 [ SEBI (SAST) Regulations, 1997 ] and subsequent amendments thereto. I. The Offer 1. This offer is being made by Mr. Mukund Choudhary, Mr. Kapil Choudhary and Mr. Ajay Kumar Choudhary (hereinafter referred to as Acquirers ) to the equity shareholders of M/s Spentex Industries Limited, having its registered office at Swastik Apartment, C.S.T.No.49/A/18, Gulmohar Path, Off Law College Road, Erandawane, Pune (hereinafter referred to as Spentex/the Target Company ). 2. The Acquirers i.e. Mr. Mukund Choudhary, Mr. Kapil Choudhary and Mr. Ajay Kumar Choudhary have entered into a Share Purchase Agreement dated January 2, 2004 ( SPA ) to acquire 10,860,000 (One Crore, Eight Lacs and Sixty thousand only) fully paid up equity shares of Rs.10/- each representing 48.87% of the total paid up equity share capital of Spentex from among the Indian promoters of Spentex, namely, CESCON Limited, a company incorporated under the Indian Companies Act, 1956 and having its registered office at CESC House, Chowringhee Square,Kolkata and KEC International Limited, a company incorporated under the Indian Companies Act, 1956 and having its registered office at 3rd Floor, Transasia House, Chandivali Studio Road, Chandivali Mumbai (collectively referred to as the Sellers ), at a price of Rs (One Paisa only) per fully paid up equity share payable in cash ( Negotiated Price ). The total consideration for the shares acquired under the SPA is Rs. 1,08,600/- (Rupees One Lac Eight Thousand Six Hundred Only) to be discharged to the Sellers by the Acquirers as per the terms agreed upon and contained in the SPA. Both the Sellers belong to the promoter group of the Target Company. 3. The Offer is not as a result of global acquisition resulting in indirect acquisition of the target company. 4. The Acquirers are making an offer to acquire 44,44,002 equity shares of Rs. 10/- each fully paid up representing 20% of the paid up/voting equity share capital of Spentex at a price of Rs. 6.60/- (Rupees Six and Paise Sixty only) per fully paid up equity share ("Offer Price") payable in cash subject to the terms and conditions mentioned hereinafter. The Offer is not subject to any minimum level of acceptances from shareholders. 5. The shares of "Spentex" are listed/permitted to trade on The Pune Stock Exchange Limited, The Stock Exchange, Mumbai, The Calcutta Stock Exchange Association Limited and The Stock Exchange, Ahmedabad. Based on the information available, the shares are infrequently traded on The Pune Stock Exchange Limited, The Calcutta Stock Exchange Association Limited and The Stock Exchange, Ahmedabad whereas they are frequently traded only on The Stock Exchange, Mumbai. The Acquirers

2 have not acquired any share of the Target Company during the 12 months period prior to the date of this Public Announcement. 6. As the shares of "Spentex" are frequently traded at The Stock Exchange, Mumbai during the preceding six calendar months prior to the month of this Public Announcement, the Offer Price in terms of Regulation 20(4) of the SEBI (SAST) Regulations, 1997 is determined taking into account the following parameters: i. Negotiated price under an agreement as referred to in sub-regulation (1) of Regulation 14 of SEBI (SAST) Regulations, 1997 ii. Price paid by the Acquirers for acquisition including by way of allotment in a public or rights or preferential issue during the twentysix week period prior to the date of this public announcement iii. The average of the weekly high and low of the closing prices of the shares of Spentex as quoted on The Stock Exchange, Mumbai (i.e. the Exchange where the shares were frequently traded) during the twenty six weeks preceding the date of this public announcement iv. The average of the daily high and low prices of the shares of Spentex as quoted on The Stock Exchange, Mumbai (i.e. the Exchange where the shares were frequently traded) during the two weeks preceding the date of this public announcement Rs (One Paisa Only) There has been no acquisition by the Acquirers during the said period of 26 weeks Rs Rs The highest price of the above is Rs i.e. the average of the daily high and low prices of the shares of Spentex as quoted on The Stock Exchange, Mumbai (i.e. the Exchange where the shares were frequently traded) during the two weeks preceding the date of this public announcement. In view of the above, the offer price of Rs. 6.60/- in terms of Regulation 20(4) of the SEBI (SAST) Regulations, 1997 is justified. 7. As on the date of this Public Announcement the Acquirers have agreed to acquire 10,860,000 fully paid up shares of Rs.10/- each representing 48.87% of the total equity share capital of "Spentex in terms of SPA and other than have not acquired any share of Spentex. II. Information about the Acquirers 1. Mr. Mukund Choudhary son of Mr. Ajay Kumar Choudhary, an Indian citizen and resident of 7, Padmini Enclave, Hauz Khas, New Delhi is an Industrialist having an experience of 12 years in the business of trading in textiles with a Net worth of Rs. 8,31,46,261/- (Rupees Eight Crores Thirty One Lacs Forty Six Thousand Two Hundred and Sixty One Only) as on duly certified by M/s. Sunil Jain & Co., Chartered

3 Accountants, 43, Darya Ganj, New Delhi through their partner Mr. S. K. Jain, Chartered Accountant, Membership No vide Net Worth Certificate dated January 1, Mr. Kapil Choudhary son of Mr. Ajay Kumar Choudhary, an Indian citizen and resident of X-10, Hauz Khas, New Delhi is an Industrialist having an experience of 9 years in the business of trading in textiles with a Net worth of Rs. 8,18,36,303/- (Rupees Eight Crores Eighteen Lacs Thirty Six Thousand Three Hundred and Three Only) as on duly certified by M/s. Sunil Jain & Co., Chartered Accountants, 43, Darya Ganj, New Delhi through their partner Mr. S. K. Jain, Chartered Accountant, Membership No vide Net Worth Certificate dated January 1, Mr. Ajay Kumar Choudhary son of Mr. Chiranjilal Choudhary, an Indian citizen and resident of X-10, Hauz Khas, New Delhi is an Industrialist having an experience of 34 years in the business of trading in textiles with a Net worth of Rs. 6,50,61,472/- (Rupees Six Crores Fifty Lacs Sixty One Thousand Four Hundred and Seventy Two Only) as on duly certified by M/s. Sunil Jain & Co., Chartered Accountants, 43, Darya Ganj, New Delhi through their partner Mr. S. K. Jain, Chartered Accountant, Membership No vide Net Worth Certificate dated January 1, Mr. Ajay Kumar Choudhary joined the family business of trading in textiles in 1970 and both his sons viz. Mr. Mukund Choudhary and Mr. Kapil Choudhary followed him. They have entered into exports as well. As on date, one of their associate concerns has got the Government of India recognized Export House status and recently the concern has been awarded by the Cotton Textile Export Promotion Council (TEXPROCIL), Mumbai with gold trophies for outstanding export performance in fabrics amongst merchant exporters for the years and They have also entered into manufacturing of yarn as well. 5. The details of Companies/Firms Promoted by any of the Acquirers are as under:- CLC Global Limited -Listed At Mumbai, Delhi and Ahmedabad Stock Exchanges. CLC & Sons Private Limited CLC Technologies Limited M/s. CLC Corporation M/s. Shri Hanuman Textile Agencies 6. As on date of this Public Announcement, there is no formal agreement between the Acquirers. III. Information about the Target Company 1. Spentex Industries Limited ( Spentex ) was incorporated as a public limited company on to carry on the business of textiles. The registered office of the Company was situated in the State of West Bengal and was shifted to the State of Maharashtra vide order of the Company Law Board, Eastern Region Bench, Calcutta dated 8 th July, Presently, the registered office of the company is situated at Swastik Apartment, C.S.T.No.49/A/18, Gulmohar Path, Off Law College Road, Erandawane,

4 Pune and its plant located at D-48, MIDC, Baramati , District Pune. 2. Spentex started its commercial production in 1993 and is an 100% export oriented unit engaged in the manufacture of high quality cotton yarn with an installed capacity of 29,232 ring spindles. The yarn is being supplied to high performance knitters in Canada, Hong Kong and Israel and other countries. The garment manufactured by them are sold in leading chain stores, especially in the United States and Europe. Spentex is certified for ISO 9001:2000 Quality Management Systems and for ISO Environment Management Systems. 3. The total paid up equity share capital of Spentex is Rs. 22,22,000,90/- (Rupees Twenty Two Crores Twenty Two Lacs and Ninety Only) divided into 2,22,20,009 fully paid equity shares of Rs.10/- each. There are no partly paid up shares in the Company. 4. The equity shares of "Spentex" are listed on The Pune Stock Exchange Limited, The Stock Exchange, Mumbai, The Calcutta Stock Exchange Association Limited and The Stock Exchange, Ahmedabad. 5. Based on the last available audited accounts for the year ending 31st March, 2003 the company has made Net Sales of Rs crores and suffered a Loss of Rs crores after providing depreciation of Rs.3.59 crores. As at , the paid up share capital was Rs Crores and the Earning per share (EPS) for the year ending 31st March, 2003 was (Rs. 5.03). Further, based on the unaudited financial results for the quarter ended on 30th September, 2003 the Net Sales of the company was Rs crores and the Loss suffered was Rs crores and the Earning per share (EPS) (not annualized) for the quarter ending 30th September, 2003 was (Rs. 1.94). 6. As at the end of the Financial Year on 31 st March, 2003, the accumulated losses has exceeded the Net Worth of the company so as to make it a 'Sick Industrial Company' within the meaning of section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, The Board of Directors of the company after forming an opinion that the company had become a Sick Industrial Company, made a reference to the Board for Industrial and Financial Reconstruction, which has been registered as Case No.284/2003. IV. Reasons for the Acquisition and offer and future plan about the Target Company 1. The Acquirers as a result of this offer will have Substantial acquisition of shares or voting rights accompanied with complete change in control and management of the Target Company. 2. The offer to the shareholders of Spentex is made in accordance with Regulation 10 and 12 of the SEBI (SAST) Regulations, The Acquirers are already carrying on the business of manufacturing and trading of textiles and this acquisition of Target Company will further consolidate their operations. 4. As on the date of this Public Announcement, the Acquirers do not have plans to dispose of or other wise encumber any asset of Spentex in two years from the date of closure of the offer except to the extent required for

5 the purpose of restructuring and/or rationalization of assets, investments, liabilities or otherwise of Spentex to take appropriate decisions in these matters as per prevailing laws/regulations as per the requirement of business. Reorganization/diversification and streamlining of the business may be considered if found to be in the best interest of the Company and its shareholders. V. Statutory Approvals/Other Approvals required for the Offer 1. Approval from Reserve Bank of India under Foreign Exchange Management Act, 1999 to purchase shares from non -resident shareholders, if any. As on date of this Public Announcement, to the best of Acquirers knowledge, there are no other statutory approvals required, other than that indicated above. The Acquirers will not proceed with the offer to the extent the statutory approval that is enumerated above being refused in terms of the SEBI (SAST) Regulations, The Offer would be subject to all other statutory approvals that may become applicable at a later date before the completion of offer. 3. The Acquirers will make the requisite application to Reserve Bank of India to obtain permission for the acquisition of shares from the non-resident shareholders. 4. SEBI has the power to grant extension of time to the Acquirers for payment of consideration to shareholders subject to the Acquirers agreeing to pay interest for the delayed period as directed by SEBI in terms of Regulation 22(12) of the SEBI (SAST) Regulations, 1997 if there is any delay in receipt of statutory approval. If, however, the delay in obtaining the requisite approval takes place on account of any willful default by the Acquirers then provision contained in Regulation 22 (13) of the SEBI (SAST) Regulations, 1997 will also become applicable. 5. The Sellers have assigned Mr. Mukund Choudhary, one of the Acquirers to deal with/ to settle the dues of the Banks and Financial Institutions. Accordingly, a deed of assignment has been signed with ICICI Bank Limited on 31 st December, 2003 for settling their dues at Rs.13,79,26,206/- by CLC Global Limited and also to settle the dues of Infrastructure Leasing & Financial Services Limited at Rs.2,75,00,000/-. Further, per the SPA, the Sellers shall apply for the approval from the Industrial Development Bank of India, as required under the Subscription Agreement dated May 8, 2000, the consent of Baramati Bank as required in terms of the Declaration as to the Constitution of the Firm/Company dated April 24, 2003 of Cosmos Bank as required in terms of its sanction letter dated December 23, 1998 and of the SBI Consortium (including the State Bank of India and Union Bank of India) and shall make its best efforts for obtaining the consent from the aforesaid banks/financial institutions. 6. The Acquirers shall withdraw this offer if the statutory approval(s) required as above is refused as provided in Regulation 27 of the SEBI (SAST) Regulations, VI. Delisting Option to the Acquirers Pursuant to this Offer the public shareholding will not be reduced to 10% or less of the voting capital of Spentex and therefore the provisions of Regulation 21(3) of SEBI (SAST) Regulations, 1997 do not apply.

6 VII. Financial Arrangements 1. The Acquirers have made firm financial arrangements to meet the obligation under the offer in full. The Acquirers have confirmed that the firm financial arrangements required to meet the obligation under the offer are in place and are available with them. As per the Net Worth Certificates dated 1st January, 2004 issued by M/s.Sunil Jain & Co., Chartered Accountants, 43, Darya Ganj, New Delhi through their partner Mr. S. K. Jain, Chartered Accountant, Membership No the Net Worth of all the Acquirers is Rs. 23,00,44,036/- (Rupees Twenty Three Crores Forty Four Thousand and Thirty Six Only) which is sufficient surplus funds to meet their obligations. 2. The total fund requirements for the acquisition of 44,44,002 equity shares/voting capital of Spentex at Rs. 6.60/- per share is Rs. 2,93,30,414/- (Rupees Two Crores Ninety Three Lacs Thirty Thousand Four Hundred and Fourteen Only). In accordance with Regulation 28 of the SEBI (SAST) Regulations, 1997 the Acquirers have created an Escrow Account in the form of a cash deposit for an amount of Rs 73,32,604/- (Rupees Seventy Three Lacs Thirty Two Thousand Six Hundred and Four Only) being 25% of the total consideration payable to shareholders under the offer with Bank of Baroda, East of Kailash, New Delhi The Acquires have empowered Chartered Capital and Investment Limited, Manager to the Offer to operate and realize the value of the Escrow Account in terms of SEBI (SAST) Regulations, In terms of Regulation 28(13), in case of non-fulfillment of obligations by the Acquirers, the Manager to the Offer shall ensure realisation of escrow amount by way of foreclosure of deposit. 5. The Manager to the Offer has satisfied itself about the Acquirers ability to implement the offer in accordance with the SEBI (SAST) Regulations, VIII. Other terms of the Offer 1. The Offer is not subject to any minimum level of acceptances from shareholders. 2. The Letter of Offer with the Form of Acceptance cum Acknowledgement will be mailed to the shareholders (except to the Acquirers and the Sellers) of Spentex whose names appear in the Register of Members of Spentex and to the beneficial owners of the shares of Spentex, whose names appear on the beneficial records of the respective Depositories, at the close of business hours as on Tuesday, the 27 th January, 2004 (the "Specified Date"). The Letter of Offer will be mailed to such shareholders by Monday, the 16 th February, The shareholders of Spentex are eligible to participate in the offer anytime before the closure of the offer by sending their Form of Acceptance cum Acknowledgement, original share certificate(s) and transfer deed(s) duly signed to the Registrar to the Offer viz.: Beetal Financial & Computer Services (P) Limited, 321-S, Chirag Delhi, New Delhi (Near Shahid Bhagat Singh College), Telephone Nos. (011) , , Fax: (011) , either by Registered Post, Courier or Hand Delivery (between 10:00 a.m. to 5:00 p.m. on all working days), on or before the date of closure of the Offer i.e. Tuesday, the 30 th March, 2004 in accordance with the instructions specified in the Letter of Offer & Application Form.

7 4. Beetal Financial & Computer Services (P) Limited, the Registrar to the Offer has opened a special depository account with Abhipra Capital Limited styled as Beetal A/c- SPENTEX-OPEN OFFER Escrow A/c. The DP ID is IN and the Beneficiary Client ID is Beneficial owners (i.e. those shareholders who hold shares in dematerialised form) can participate in the offer anytime before the closure of the offer i.e. Tuesday, the 30 th March, 2004 by sending their Form of Acceptance cum Acknowledgement alongwith a photocopy of the delivery instructions in Offmarket mode or counterfoil of the delivery instructions in Off-market mode, duly acknowledged by the Depository Participant (DP) in favour of special depository account as mentioned in point (4) above to the Registrar to the Offer either by Registered Post, Courier or Hand Delivery (between 10:00 a.m. to 5:00 p.m. on all working days), on or before the closure of the Offer i.e. Tuesday, the 30 th March, 2004 in accordance with the instructions specified in the Letter of Offer & Application Form. 6. The Contact person in the Office of the Registrar to the Offer is Mr. Punit Mittal. 7. Eligible persons to the offer may also download a copy of the Letter of Offer and Form of Acceptance cum Acknowledgement, which is available on SEBI's website at in and can apply for the offer in such downloaded form. 8. The unregistered owners of shares are also eligible to participate in the Offer by sending their application in writing to the Registrar to the Offer on a plain paper stating the Name, Address, No. of shares held, No. of shares offered under the offer, Distinctive Nos., Folio No., together with the original Share Certificate(s) and transfer deed(s) and the original contract note issued by the broker through whom they have acquired their shares. No indemnity is required from unregistered shareholders. 9. In the event of non-receipt of Letter of Offer, the eligible persons may send application on plain paper stating the Name, Address, No. of shares held, No. of shares offered under the offer, Distinctive Nos., Folio No. along with all documents as mentioned above, so as to reach the Registrar to the Offer on or before the date of closure of the offer i.e. Tuesday, the 30 th March, 2004 or in case of beneficial owners (those shareholders who hold shares in dematerialised form) may send the application in writing to the Registrar to the Offer on a plain paper stating the Name, Address, No. of shares held, No. of shares offered under the offer, the name of the DP, DP ID No., beneficiary account number with a photocopy of the delivery instructions in Off-market mode or counterfoil of the delivery instructions in Off-market mode, duly acknowledged by the DP in favour of special depository account so as to reach the Registrar to the Offer on or before the closure of the Offer i.e. Tuesday, the 30 th March, The Registrar to the Offer will hold in trust the shares/share certificate(s), shares lying in credit of the special depository account, Form of Acceptance cum Acknowledgement, if any, and the transfer deed(s), till the Acquirers complete their offer obligations in terms of the SEBI (SAST) Regulations, Applications which are complete in all respect and which reach the Registrar to the Offer on or before the date of closure of the Offer i.e. Tuesday, the 30 th March, 2004 would be approved and accepted by the Acquirers. The payment of consideration for the applications so accepted will be made by crossed account payee cheque/demand draft/pay order. The intimation regarding acceptance of applications and payment of consideration will be dispatched to the shareholders by registered post at the shareholders sole risk. In case of joint holder(s), the cheques/demand draft will be drawn in the name of the first holder and in case of

8 unregistered owners of shares the consideration will be paid to the person whose name is stated in the contract note. 12. In the event of non acceptance of any application, all the documents as forwarded to the Registrar to the Offer will be sent back to the shareholder by registered post at shareholders sole risk. In case of shares held in dematerialised form, to the extent not accepted will be credited back to the beneficiary account with the respective DP as per the details furnished by the beneficial owner in the Form of Acceptance cum Acknowledgement. 13. All valid responses will be accepted subject to maximum of the offer made as per this public announcement. In case of response in excess of this offer made by the Acquirers, the acceptances would be made on proportionate basis in consultation with the Manager to the Offer in accordance with the SEBI (SAST) Regulations, Schedule of activities pertaining to the Offer is given below: IX. General Activity Day and Date Specified Date Tuesday, the 27 th January, 2004 Date by which Letter of Offer Monday, the 16 th February, 2004 will be posted to the shareholders Date of Opening of the offer Monday, the 1 st March, 2004 Date of Closing of the offer Tuesday, the 30 th March, 2004 Last date for a competitive bid Tuesday, the 27 th January, 2004 Last date for revising the offer Thursday, the 18 th March, 2004 price/number of shares Date of communicating Tuesday, 27 th April, 2004 rejection/acceptance and payment for application accepted will be dispatched 1. Shareholders who have accepted the offer by tendering the requisite documents, in terms of the Public Announcement/Letter of Offer, can withdraw the same upto three working days prior to the date of the closure of the offer i.e. latest by Wednesday, the 24 th, March, 2004 by filling the Form of Withdrawal enclosed with the Letter of Offer. The Form of Withdrawal is also available on the SEBI website 2. The Acquirers can revise the price upwards upto 7 (seven) working days prior to closure of offer and if there is any upward revision in the offer price by the Acquirers till the last date of revision i.e. Thursday, the 18th March, 2004 the same would be informed by way of Public Announcement in the same newspapers in which the original public announcement had appeared and same price would be paid to all the shareholders who tender their shares in the offer. 3. If there is competitive bid: i. The public offers under all the subsisting bids shall close on the same date. ii. As the offer price cannot be revised during 7 working days prior to the closing date of the offers/bids, it would, therefore, be in the interest of shareholders to wait till the commencement of that period to know the final offer price of each bid and tender their acceptance accordingly"

9 4. The Acquirers, Sellers and the Target Company have not been prohibited by SEBI from dealing in securities, in terms of directions issued under section 11B of SEBI Act. 5. This Public Announcement would also be available on the SEBI s web-site at 6. This Public Announcement is issued on behalf of Acquirers by Chartered Capital and Investment Limited, the Manager to the Offer. 7. The Acquirers viz. Mr. Mukund Choudhary resident of 7, Padmini Enclave, Hauz Khas, New Delhi , Mr. Kapil Choudhary resident of X-10, Hauz Khas, New Delhi and Mr. Ajay Kumar Choudhary resident of X-10, Hauz Khas, New Delhi accept full responsibility for the information contained in this Public Announcement and also for the obligations of Acquirers laid down in the SEBI (SAST) Regulations, 1997 and subsequent amendments made thereof. Issued by Manager to the Offer: Registrar to the Offer: Chartered Capital and Investment Limited Beetal Financial & Computer Services (P) Limited 13, Community Centre, 321-S, Chirag Delhi, East of Kailash, New Delhi New Delhi (Near Shahid Bhagat Singh College) Tel.: (011) , Tel.: (011) , Fax: (011) Fax: (011) ccapdelhi@indiatimes.com beetal@rediffmail.com Contact Person: Mr. Akshat V. Pande Contact Person: Mr. Punit Mittal On behalf of the Acquirers Date: 6th January 2004 Place: New Delhi