Shilpi Cable, BDR Builders Spar Over Open Offer
Will there be an open offer in Shilpi Cable?
Shilpi Cable Technologies Ltd. said that BDR Builders and Developers Pvt. Ltd.’s holding in the cable maker has crossed the 25 percent threshold, triggering the mandatory open offer.
The real estate developer acquired 18.47 percent stake on May 1 after invoking pledged shares, Shilpi Cable said in a statement to exchanges. Subsequent internal research showed that BDR along with “persons acting in concert” held nearly 26.24 percent as of July 7, it said.
Any investor whose stake in a listed company crosses 25 percent needs to make an open offer to public shareholders to acquire another 26 percent under the market regulator’s takeover rules.
Rajesh Gupta, managing director of BDR Group and one of the persons named in the release, said Shilpi Cable’s statement was false. “I own only 18.5 percent in the company.” The cable maker is only trying to “hide their offences” as they have not made payments, he told BloombergQuint over the phone. “I am in talks with my legal experts to give a reply,” Gupta added.
Shares of Shilpi Cable hit 35 straight lower circuits and declined 90 percent to Rs 22 apiece in the last five months. It’s yet to file its results for the quarters ended March and June and its credit rating was downgraded to default by Brickwork Ratings on August 4. Nearly the entire 41.2 percent promoter stake in the cable maker was pledged as of June, according to exchange filings .
BDR Group had lent Rs 51 crore to the promoters of Shilpi Cable against pledged shares, said Gupta. Cheques issued by the promoters were dishonoured, he alleged.
Iqbal Singh, president at Shilpi Cable, refused to comment.
The company also saw its financials deteriorating as its total debt increased more than four times since financial year 2012-13 and interest coverage ratio declined from 7.2 to 4.3 times. A ratio of one or more means that the company will cover its cost of debt for the year.
