SEBI decision on Takeover Code likely on 30th June

An agreement seems to have emerged between the finance ministry and the capital market regulator for raising the trigger limit from 15% to 25%, as recommended by a SEBI panel but the government is not in favour of 100% open offer

New Delhi: The Securities and Exchange Board of India (SEBI) is likely to raise the trigger limit for open offer to 25% when it takes a decision on the new Takeover Code for mergers and acquisitions at its board meeting scheduled later this month, reports PTI.

“SEBI is likely to clear the Takeover Code in its board meeting scheduled on 30th June,” an official said.

An agreement seems to have emerged between the finance ministry and the capital market regulator for raising the trigger limit from 15% to 25%, as recommended by a SEBI panel but the government is not in favour of 100% open offer, sources said.

“Certainly not 100%,” the official said when asked if the open offer would be for the entire stake.

“More or less it would be between 50% and 75%,” he added.

The SEBI committee headed by C Achuthan on a new Takeover Code had suggested that the acquiring company should make 100% open offer, thus giving the exit option to all the shareholders of the target company.

Current norms mandate acquirer to make an open offer of 20% in the target company. The recommendation of 100% open offer was opposed by the industry as it would have made acquisition a very expensive proposition.

As per the SEBI panel’s recommendations made in July last year, an entity buying 25% stake in a company should make an open offer to the rest of the shareholders.

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Higher food prices here to stay: OECD-FAO report

The report noted that food prices are expected to fall from the current high level in the coming months on good harvest but the prices are expected to be higher in this decade than 2001-2010

New Delhi: Global food prices are expected to be higher in the 2011-20 period compared with the previous decade and this could have a ‘devastating’ impact on the poor in developing countries, reports PTI quoting an OECD-FAO report.

“Higher food prices and volatility in commodity markets are here to stay,” Organisation for Economic Co-operation and Development (OECD) and Food and Agriculture Organisation (FAO) said in a joint report released today.

The report ‘OECD-FAO Agriculture Outlook for 2011-2020’ noted that food prices are expected to fall from the current high level in the coming months on good harvest but the prices are expected to be higher in this decade than 2001-2010.

“A good harvest in the coming months should push commodity prices down from the extreme levels seen earlier this year. However, the outlook states that over the coming decade real prices for cereals could average as much as 20% higher and those for meats as much as 30% higher, compared to 2001-10,” the report said.

The projections are well below the peak price level experienced in 2007-08 and again this year, it added.

“While higher prices are generally good news for farmers, the impact on the poor in developing countries which spend a high proportion of their income on food can be devastating,” said OECD secretary general Angel Gurria in a statement.

The report pointed out that higher prices for commodities are being passed through the food chain, which leads to rising consumer price inflation in most countries.

“This raises concern for economic stability and food security in some developing countries, with poor consumers most at risk of malnutrition,” it added.

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Hotel Leelaventure eyes partnership with realty firms

Hotel Leelaventure is looking to raise around Rs1,950 crore through sale of equity and assets and foreign currency convertible bonds

Hotel Leelaventure said it is exploring opportunities to partner with real-estate firms on a revenue sharing basis to develop its land bank in Hyderabad and Bangalore.

The hospitality chain, which is looking to raise around Rs1,950 crore through sale of equity and assets and foreign currency convertible bonds, has shelved earlier plans to build hotels in Hyderabad and is instead looking at building upmarket residential complexes.

“In Hyderabad, the company shelved initial plans of building a luxury hotel (on 3.85 acres of land) after significant new supply came up in the area,” the company said in a corporate presentation filed on the Bombay Stock Exchange (BSE).

It is now evaluating various revenue sharing opportunities to maximise value as in case of Pune, it added.

Similarly in Bangalore, there is a surplus land of over 8,000 square meters next to its Leela Palace hotel property and similar project could be taken up.

The company has already shelved initial plans of building a luxury hotel in Pune. Instead, it is developing a high-end residential-cum-commercial property in association with Sky Realty Projects on a 50:50 gross revenue sharing basis.

In Chennai, the hospitality chain has an office space with some saleable area which it proposes to sell and lease. In April this year, the company had said it will raise Rs1,950 crore through sale of equity and assets, and foreign currency convertible bonds to partly repay its debt of Rs3,800 crore.

The promoters are looking to sell about 14.95% stake to private equity players for about Rs600 crore. Hotel Leelaventure, which currently operates seven luxury hotels in India with a total capacity of 1,869 rooms, is also building another property in Chennai (329 rooms), besides expanding its existing property in Goa (additional 20 rooms). The Chennai property is likely to be completed by FY12, it said.

Going ahead, the company also has plans to expand its footprint into markets outside India and focus on management contracts than owning properties. It also intends to evaluate expanding in overseas markets through the  management contract route, it said without specifying details.

Besides, the firm is also evaluating the option to set up four or five star hotels in Tier-II cities in India, under a different brand.

On Friday, Hotel Leelaventure ended 0.53% up at Rs37.80 on the Bombay Stock Exchange, while benchmark Sensex declined 0.64% to 17,870.53.

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