MUMBAI: After acquiring a majority stake (69.2 per cent) in AIM listed The Indian Film Company (TIFC), Network 18 Holdings has informed its independent directors that it does not plan to cancel the company’s quotation on AIM if it acquires more than 75 per cent of shares in future.
The independent directors of the company, which also comprise filmmaker Shyam Benegal, sought clarification from Network 18 as to its intentions regarding the future of the company.
In response to the query regarding the company’s shares on AIM, Network 18 said that "its current intention was to retain the company’s AIM quotation even if the level of acceptances in respect of the offer increases the Network 18 Parties shareholding to 75 per cent or more of the existing issued ordinary share capital of the company although as stated in the offer document, Network 18 reserves the right to review its position depending on the level of acceptances when the offer closes."
The offer will close on 7 September 2009. Further, Network 18 has said that currently, the only circumstance in which it envisages cancelling the Indian Film Company’s quotation on AIM as a result of the outcome of the offer would be if it receives valid acceptances under the offer in respect of, and/or otherwise acquires, 90 per cent or more of the existing issued ordinary share capital of the company to which the offer relates such that Network 18 may exercise its rights to acquire compulsorily the remaining Indian Film Company shares.
Moreover, Network 18 also plans to retain the investment manager and investment adviser. While the existing independent directors will be retained, the company may appoint its nominees.
TIFC’s independent directors also questioned Network 18 on how it proposes in practice to generate the anticipated benefits of the Indian Film Company being consolidated as a Network 18 group company? To this, the company said, "The principal benefits that Network 18 believes it can bring to Indian Film Company are providing the company with the ability to leverage from the Network 18 brand name, its management, advisers and contacts in all aspects of the Indian Film Company’s business operations, including better access to capital on the strength of Network 18 Group’s track record with the financial community."
Further, the company also informed shareholders that if they do not accept the offer in respect of their own shareholding, they will be minority shareholders in a controlled company with a reduced number of shares that are held in public hands as a result of Network 18’s current level of shareholding, and this may have a significant adverse impact on the liquidity and marketability of their shares in the future. Moreover, if the Indian Film Company’s quotation is cancelled at some future date, it may not be possible for shareholders to realise as much as 40 pence per Indian Film Company share, should they so wish, before the quotation is cancelled and shareholders might find themselves as minority shareholders in an unquoted company.
The independent directors have also said that it is no longer possible to provide shareholders with a definitive recommendation at this time regarding Network 18’s offer.