SEBI must force Sterling & Wilson Solar promoters to provide exit offer to IPO investors | TRADE NIVESH
TRADE NIVESH The promoters of SWS had raised Rs. 2,850 crore from the IPO last year by offering a part of their stake to the public, with the intention to repay the loans of the company
Proxy advisory firm InGovern Research Services has said that market regulator Securities and Exchange Board of India must force the promoters of Sterling and Wilson Solar (SWS) to provide an exit offer to investors who had subscribed to the company's Initial Public Offering. That is because the promoters have not repaid the loans of the company, as promised in the prospectus, for which funds were raised through the public issue.
The promoters of SWS had raised Rs. 2,850 crore from the IPO last year by offering a part of their stake to the public.
"While the objects of the IPO were to enable the promoters to repay loans amounting to Rs. 2,563 crore to SWS within 90 days of listing, the Company has received only Rs. 1000 crore on December 31, 2019,
i.e., 133 days after listing," the InGovern note said, adding, "this is tantamount to change of objects of the IPO from what was stated in the prospectus."
Shares of SWS have fallen 60 percent from the issue price of Rs 780, since listing in August 2019.
SEBI (ICDR) Regulations, 2018 allow for the dissenting shareholders to be provided an exit offer by the promoters, in cases where there is a change in objects of the issue/ offer in the IPO prospectus.
"In this case, where shareholders have suffered significant erosion in value of their holdings solely due to the non-utilisation of funds as per the objects of offer of the IPO, SEBI must force the promoters to provide an exit
offer to shareholders at a price as per SEBI (ICDR) Regulations," the InGovern note said.
In November, the Shapoorji Pallonji Group and Khurshed Yazdi Daruvala, the promoters of SWS had sought an extension for repayment of inter-corporate loans citing tightness in the money market.
We will update this copy when we receive a comment from the company.
ASK AN EXPERT TRADE NIVESH
Proxy advisory firm InGovern Research Services has said that market regulator Securities and Exchange Board of India must force the promoters of Sterling and Wilson Solar (SWS) to provide an exit offer to investors who had subscribed to the company's Initial Public Offering. That is because the promoters have not repaid the loans of the company, as promised in the prospectus, for which funds were raised through the public issue.
The promoters of SWS had raised Rs. 2,850 crore from the IPO last year by offering a part of their stake to the public.
"While the objects of the IPO were to enable the promoters to repay loans amounting to Rs. 2,563 crore to SWS within 90 days of listing, the Company has received only Rs. 1000 crore on December 31, 2019,
i.e., 133 days after listing," the InGovern note said, adding, "this is tantamount to change of objects of the IPO from what was stated in the prospectus."
Shares of SWS have fallen 60 percent from the issue price of Rs 780, since listing in August 2019.
SEBI (ICDR) Regulations, 2018 allow for the dissenting shareholders to be provided an exit offer by the promoters, in cases where there is a change in objects of the issue/ offer in the IPO prospectus.
"In this case, where shareholders have suffered significant erosion in value of their holdings solely due to the non-utilisation of funds as per the objects of offer of the IPO, SEBI must force the promoters to provide an exit
offer to shareholders at a price as per SEBI (ICDR) Regulations," the InGovern note said.
In November, the Shapoorji Pallonji Group and Khurshed Yazdi Daruvala, the promoters of SWS had sought an extension for repayment of inter-corporate loans citing tightness in the money market.
We will update this copy when we receive a comment from the company.
ASK AN EXPERT TRADE NIVESH
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