Mumbai, Aug. 21: Kishore Chhabria today announced an open offer for 20 per cent of Herbertsons’ equity at a price of Rs 90.50 per share and an interest rate computed at the rate of 15 per cent from 1995.
Eight years of interest for investors who hold the stock since January 25, 1995 will amount to Rs 108.50 — more than the price of a share — in a deal that will take the total payment against each share close to Rs 200.
Analysts say the move will increase the pressure on Vijay Mallya, locked in a battle of control with Chhabria, to spring an offer that is sweeter than the one made today.
Kishore, the younger brother of Shaw Wallace promoter Manu Chhabria, found himself plonked into the spotlight after the Securities Appellate Tribunal, asked him to make an open offer for Herbertsons’ shares. The tribunal hears appeals against Sebi orders.
Today’s move, in compliance with the SAT order, has been made by Kishore R. Chhabria and Madanlal D. Chhabria. The offer for 19.04 lakh shares will open on October 3 and close on November 1, manager Lazard India said. The deadline for a competitive bid is September 11.
While Chhabria personally does not control any equity in Herbertsons, his associates, including Veneer Investment & Finance, Algid Investment & Finance and IMFA Holdings, are sitting pretty with 47 per cent.
On August 1, the tribunal ordered Chhabria to make an open offer for 20 per cent of Herbertsons, along with interest at the rate of 15 per cent. In doing so, it overturned a February-2002 Sebi decision that asked UB group chief Vijay Mallya and Chhabria to divest stakes.
Sebi had ruled that Chabbria would have to offload 37.48 per cent to prune his stake to 10 per cent. The Mallya group was asked to bring down the shareholding to 21.38 per cent, 11.38 per cent more than Chabbria’s permissible stake of 10 per cent in the company.
On August 5, Mallya claimed he was in talks to buy out Chhabria in Herbertsons even as he filed a petition requesting SAT to halt the open offer in its tracks. The suit will come up for hearing on August 25.
Mallya’s scramble to SAT is to make sure that his bete noire Chhabria does not get an opportunity to shore up his holding to a level that would give him control. “There will be more twists and turns in the battle for Herbertsons,” said an observer tracking the company.
Today’s move has dashed expectations of an imminent truce, fuelled by Mallya’s conciliatory tone in recent weeks that he was close to resolving the tangle.
Industry watchers say Chhabria would insist on BDA, a company he once owned, and its flagship brand Officer’s Choice, along with generous wads of cash, if Mallya tries to buy peace. The price for the Herbertsons share, which might be arrived at after tortuous haggling, could be in the region of Rs 200 to Rs 250. That would also be the basis for the valuation of BDA.
The paid-up capital of Herbertsons is Rs 9.52 crore. The company that sports Bagpiper as its flagship brand had a total income of Rs 309.92 crore.