MUMBAI: The plan is to delist the Indian Film Company (IFC) as Network18 Holdings, the subsidiary of Raghav Bahl-promoted Network18 Media & Investments, ramps up its stake in the movie company.
Network18 said it is open to cancel IFC’s quotation on AIM, once it acquires 90 per cent or more of the existing issued ordinary share capital of the company.
At present, Network18 has received acceptance for increasing its stake in the AIM-listed movie company to 69.2 per cent. After increasing its stake in IFC to 35.99 per cent, Network18 had to make a mandatory offer for all the remaining shares not owned by it, as per UK takeover code.
Network18 was responding to the independent directors’ query, for its (Network18’s) intentions regarding the future of the IFC.
Network18 said, "The only circumstance in which Network18 envisages cancelling the Indian Film Company‘s quotation on AIM as a result of the outcome of the offer would be if Network18 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 IFC to which the offer relates such that Network18 may exercise its rights to acquire compulsorily the remaining IFC shares.”
However, Network18 will not delist IFC from AIM even if it completes 75 per cent acquisition. “It is Network18‘s current intention to retain the company‘s AIM quotation even if the level of acceptances in respect of the offer increases the Network18 parties shareholding to 75 per cent or more of the existing issued ordinary share capital of the company.”
Network18 reserves the right to review its position depending on the level of acceptances when the offer closes, which is on 7 September 2009.
There are obvious benefits to IFC if it gets consolidated as a Network18 group company. It can provide IFC with the “ability to leverage from the Network18 brand name, its management, advisers and contacts in all aspects of the business operations." This includes "better access to capital on the strength of Network18 Group‘s track record with the financial community.”
In the response note, the company also mentioned that if shareholders 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 Network18‘s current level of shareholding. This may have a significant adverse impact on the liquidity and marketability of their shares in the future, the company added.
“It is also important for shareholders to consider that, if the IFC’s quotation is cancelled at some future date, it may not be possible for shareholders to realise as much as 40 pence per IFC share, should they so wish, before the quotation is cancelled and shareholders might find themselves as minority shareholders in an unquoted company,” the note said.
