Mumbai: Capital market regulator SEBI Monday allowed Fresenius Kabi Oncology to delist its shares from the Indian stock market and asked the healthcare firm to complete the delisting process within three months -- bringing to an end a long-standing dispute.
Allowing the company to initiate the delisting process, SEBI however said that the company would have to take into account its pre-OFS (Offer for Sale) promoter holding of October 2012 to determine the minimum number of shares to be acquired for the delisting.
The healthcare services firm was engaged in a dispute with SEBI ever since it decided to delist its shares from the stock market despite having sold some promoter shares through OFS to meet the minimum 25 percent public shareholding norms.
The company was required to undertake further promoter share sale to completely meet the norms, but it decided to rather delist the shares due to "unforeseen circumstances" and sought a permission from SEBI for the same.
However, the permission was refused on the grounds that Fresenius had availed the OFS route, which was meant for meeting the minimum shareholding norms.
It later approached the Securities Appellate Tribunal, which asked the company to propose a fresh delisting offer to SEBI, which in the meantime had passed prohibitory orders against the company for failing to meet minimum public holding norms within June 3 deadline.
The restrictions on promoter dealings in the company shares would be reimposed if the company fails to complete its delisting process in three months, SEBI said in its today's order. Other restrictions on promoters and directors would continue to remain in force till the time it is delisted, or till the time it attains 25 percent public holding.
SEBI said that the delisting offer for buyback of shares would need to be decided as per its pre-OFS shareholding.
As per SEBI norms, a delisting offer is considered successful if the post-offer shareholding of promoters crosses the higher of 90 percent of the company's total share capital, or the aggregate percentage of pre-offer promoter shareholding and 50 percent of the offer size.
Before the OFS, the promoter holding was 90 percent, which has now fallen to 81 percent. For the delisting process to succeed, the promoters would need to acquire more than 9 percent from the public investors.
The company has also filed an application before the FIPB, the government's foreign investment approval board, to seek approval for its proposed delisting process.
The Securities and Exchange Board of India (SEBI) said that Fresenius's promoter shall be "permitted to buy the equity shares from the public shareholders as part of the delisting offer."
"The company shall endeavour to complete the delisting process within a period of three months from the date of this order."
Besides, the regulator said the "pre-OFS shareholding of the promoter shall be applicable" for the proposed delisting offer.
Meanwhile, the Foreign Investment Promotion Board (FIPB) would consider the proposal of Fresenius Kabi (Singapore) Pte Ltd to acquire the entire public shareholding of Fresenius Kabi Oncology Ltd through a voluntary delisting offer at its meeting on July 29.
Last month, SAT had directed Fresenius to make a fresh representation to SEBI regarding its delisting plan. The company had approached the Tribunal after the market regulator refused the firm's proposal to delist from stock exchanges.
SEBI, however, had refused permission to the company for its delisting plans, as it had benefited from a specially designed OFS route for expanding the public float of shares.
The company has said its decision to get delisted was triggered by certain sudden 'extraneous' events.
Fresenius had sold 9 percent promoter shareholding through OFS mechanism in October 2012 for complying with the minimum public shareholding norms, it later in April this year proposed to delist its shares from the bourses rather than selling a further 6 percent to meet the listing requirement.
The delisting offer has been approved by Fresenius 's public shareholders and also received in-principle approvals from BSE and NSE on May 30 and June 3, respectively.
Shares of the company closed today at Rs 110.40, up 0.78 percent, compared to Friday's closing value.