The promoters of TeleCanor allege that investor Hemant Gupta is trying all the tricks to make an open offer for the company. Mr Gupta powerfully argues otherwise
The messy fight between the promoters of TeleCanor Global Ltd and savvy investor Hemant Gupta has surfaced once again where Mr Gupta is on the verge of making an open offer to buy the company if his 1 million warrants are converted into shares.
However, on Thursday, TeleCanor informed the Bombay Stock Exchange (BSE) that “the company is in the process of refunding any amount paid for conversion which is not accompanied by a consent or full payment from the warrant holder. Such refunds will be processed after deducting the initial amount paid for advance amount for share warrants.”
TeleCanor held a board meeting on 26th February to discuss the various complaints of Mr Gupta and also to consider conversion of his warrants into shares. But there seems to be some confusion regarding the ownership of these shares.
“He (Mr Gupta) wants to take away 4.2 lakh shares from the purview of (the) takeover code. He has 2.9 lakh shares, which are with Motilal Oswal Financial Services Ltd (MOFSL),” said Maruti Ram, managing director, TeleCanor.
“On 3 September 2009, shares were transferred from Mr Gupta to Motilal Oswal but it did not appear on the BSE website. We still don’t know who is the real owner of these shares. Why do we have to take his consent if the warrants are fully paid?” asked Mr Ram.
As of end-September 2009, Mr Gupta had 7,72,097 shares or about 12.34% stake in TeleCanor. However, subsequently, his name disappeared from the public shareholders’ list. According to BSE data, as of December 2009, MOFSL held 1,44,900 shares or around 2.5% stake in TeleCanor.
Mr Gupta admitted that he bought some shares from MOFSL and after his failure to pay, the brokerage took over the shares. “I had purchased some shares from MOFSL under margin funding and I have not made the payment, so MOFSL has taken those shares back,” admitted Mr Gupta. An email query sent to MOFSL from Moneylife remained unanswered till writing the story.
TeleCanor promoters have alleged that MOFSL is not disclosing Mr Gupta’s name. Mr Ram said that Mr Gupta has not even signed a consent letter that was sent to him on Wednesday.
If Mr Gupta’s take goes above 15% following conversion of his warrants into shares, he will have to make an open offer. TeleCanor officials met BSE officials on Thursday to discuss the issue, but refused to divulge the details of their discussion.
Separately, Mr Gupta has also questioned how BSE can allot 45 lakh warrants to the promoters which is over 90% of paid-up equity of the company (Rs5 crore).
Moneylife had earlier reported that Mr Gupta had accused the promoter of siphoning off funds meant for funding of a payment gateway business. (Read here). TeleCanor shares shed 23% to Rs33.75 as on 4 March 2010 from Rs43.80 on 8 October 2009.
According to Mr Gupta, shareholders Vimal and Om Prakash agreed to take around 2 million warrants from Maruti Ram at Rs17-18 (issue price was Rs11.80 which means Maruti Ram will make a profit of Rs5-6 per warrant). “These two gentlemen have paid a total of Rs1.80 crore (part of it in the name of TeleCanor and part in the name of Maruti Ram). This entire money has been deposited by (the) promoter in TeleCanor’s bank account,” alleged Mr Gupta.
He also alleged that the promoter agreed to sell 1.50 lakh warrants at Rs19 per warrant, to Mukesh Shah, a shareholder in TeleCanor. According to Mr Gupta, thereafter, Mr Shah prepared two demand drafts favouring TeleCanor and also in the name of Mr Ram for 90% premium but did not hand over the demand draft to Mr Ram as he was not given possession of warrants and the transfer deed (signed by the seller).
Mr Gupta demands that the BSE declare the promoter’s warrants null and void. “He (Mr Ram) did not pay cash to TeleCanor for application money. He just passed accounting (entries in) the journal voucher. Only under special conditions, a promoter can convert his loan into equity for which disclosure has to be made and permission has to be taken from regulatory bodies to convene an Extraordinary General Meeting (EGM),” added Gupta. He also alleged that Mr Ram has frequently cancelled board meetings due to lack of quorum, but the BSE was keeping quiet. “It makes a mockery of (TeleCanor’s) listing,” said Mr Gupta.