Tribunal reaffirms relevant date for open offer price calculation

A recent order passed by the Securities Appellate Tribunal (SAT) in the matter of Goldstone Exports has reaffirmed the manner of calculation of open offer price under the takeover code in the event of conversion of warrants into equity shares.

Goldstone held 9.51% of the equity share capital of Goldstone Infratech (the target), a company listed on the Bombay Stock Exchange and the National Stock Exchange. At a meeting held on 25 January 2007 the target’s board of directors considered a preferential issue of 15 million share warrants to Goldstone at a price of Rs22 per share warrant. The issue was approved by target’s shareholders at an extraordinary general meeting held on 24 February and was concluded on 30 April.

At the expiry of tenure of the share warrants, the target’s board of directors authorized conversion of share warrants and allotted 15 million resultant equity shares to Goldstone at a meeting on 29 October 2008. As a result Goldstone’s holding in the target increased from 9.51% to 47.19%, triggering the open offer requirement under the takeover code.