Adam Investments make mandatory offer on Orient Garments
Thursday, 5 December 2013 00:06
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No mandatory offer on PCH Holdings since present stake at 16% – far below 30% threshold
PABC disposes near 20 m Adam Investments’ PCHH shares held in margin trading account
Adam Investments Ltd. yesterday announced its mandatory offer at Rs. 8 per share to remaining shareholders of Orient Garments Plc, whilst there will be no such offer on PCH Holdings Plc since the stake is far below the 30% threshold.
PCH Holdings’ Secretaries Global Corporate Solutions on Tuesday in a filing to the CSE said Adam Investments’ stake in PCH Holdings as of 2 December was 16.26%. This was following Adam Investments buying 25.5 million shares or a 10.12% stake in PCHH for Rs. 51 million on Monday.
In its report on Tuesday, the Daily FT, based on Adam Investments’ stake of 20.76% as of end September 2013 shareholding in PCHH and the 10.12% stake acquired on Monday, stated that the former has triggered the SEC’s Takeovers and Mergers Code and would make a mandatory offer.
However, as per the disclosure by PCHH’s secretaries, it is now confirmed that Adam Investments has indeed reduced its holdings in PCHH since end September. On Monday 37.5 million shares (a 15% stake) of PCHH traded for Rs. 71.46 million.
In fact Daily FT now learns that whilst it acquired a 10% stake in PCHH on Monday at Rs. 2 per share from Finco Group, in a bizarre development, Pan Asia Bank sold around four million PCHH shares worth around Rs. 8 million held in margin trading account by Adam Investments. Pan Asia Bank also sold a further 15 million shares or a 6% stake in PCHH held by Adam Investments in margin account on Tuesday for Rs. 27 million.
On the buying side on Tuesday was also Dr. T. Senthilverl, who picked up Rs. 28 million worth of PCHH shares.
Meanwhile, Adam Investments Plc yesterday formally announced the mandatory offer on Orient Garments Plc, a subsidiary of PCHH at Rs. 8 per share.
This was following Adam Investments on Monday buying a 13.65% stake or 7.5 million shares at Rs. 8 each in a deal worth Rs. 60 million. This acquisition pushed Adam Investments’ overall holding in Orient Garments to 39.78% as of 2 December 2013. On Monday, 17.14 million shares of Orient Garments or a 31% stake traded for Rs. 137 million.
In its original filing on Monday, Orient Garments secretaries disclosed only the purchase of 7.5 million shares by Adam Investments. This incidentally was via the margin account at Pan Asia Bank Plc.
That apart, Adam Investments bought a further nine million shares of Orient Garments on its own account at Rs. 8 per share. Directly bought shares were those held by Finco Group, whilst what was purchased via the PABC margin account was PCHH Holdings’ stake in Orient Garments deposited with Merchant Bank Plc.
As part of the announcement of mandatory offer, Adam Investments yesterday confirmed it bought a 29.7% stake or 16.35 million Orient Garments shares at Rs. 8 each.
The offer is to acquire 33 million shares of Orient Garments held by others and if accepted, Adam Investments will be paying Rs. 264 million. Yesterday the stock price hit an intra-day high of Rs. 8.30 before closing at Rs. 8.
Dr. Senthilverl as of end September held a 14% stake in Orient Garments and is likely to support Adam Investments. PCH Holdings’ stake in Orient Garments was 39.34%, of which MBSL sold a 13.65% stake.
Both Orient Garments and PCHH made losses in the first half of FY14.
