In a major relief to PNB Housing Finance Limited, the Securities Appellate Tribunal (SAT) on Monday allowed the housing finance company to conduct the Extraordinary General Meeting (EGM) scheduled for 22 June, which would vote on the mortgage financier’s Rs 4000 crore deal with a clutch of investors led by private equity firm Carlyle.
The tribunal in its order said that the matter will come up for hearing next on July 5, when the tribunal will decide on whether a valuation report from registered valuer is required to be done. The interim order was passed orally by SAT and the written order is awaited.
The tribunal, however, has directed PNB Housing to not disclose the voting result on the resolution until further directions. SAT has also directed the company to inform NSDL also to not declare the voting pattern and the same should be kept in a sealed cover till further orders.
The directions by SAT were passed on an appeal filed by PNB Housing Finance which had challenged the directions by SEBI relating to the valuation procedure of the former’s Rs 4,000 crore transaction with the Carlyle-led consortium. The consortium includes former HDFC Bank MD and CEO Aditya Puri and private equity funds General Atlantic and Ares SSG. PNB Housing Finance made the announcement in a disclosure to the stock exchanges.
The shareholders’ meet is scheduled on June 22 (Tuesday). In a letter sent to the public sector lender last week, the market regulator halted the deal temporarily and said the notice for an EGM scheduled for June 22 was not consistent with the firm’s articles of association. SEBI directed the lender to undertake the valuation exercise based on the firm’ articles of association. The regulator told PNB Housing not to seek shareholders approval on the deal before carrying out a valuation on its business by an independent agency.
PNB Housing has argued that under Section 62(1)(c) of the Companies Act a provision has been made for valuation through a registered valuer but under Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014 this requirement has been dispensed with where preferential allotment of shares is being issued by a listed company. SAT has directed Sebi to file a reply by June 26 and rejoinder, if any, by July 4.
For the uninitiated, PNB Housing’s board has approved preferential allotment of Rs 3,200 crore worth of shares and Rs 800 crore worth of warrants to Carlyle at Rs 390 per apiece. The transaction will trigger an open offer as Carlyle will replace state-owned PNB as the controlling shareholder of PNB Housing. The open offer to acquire 26 per cent shares from the public will be made at Rs 403 per share.
Following the deal announcement, shares of PNB Housing nearly doubled to Rs 881. The stock has come off amid uncertainty around the deal. Shares of PNB Housing hit the five per cent lower limit on Monday and closed at Rs 702.4 per share.
