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Credit Suisse's stake sale in Prime Focus 'blatant abuse of purported rights': Reliance Capital

The proposed sale price (Rs 44.15 per share) is at a substantial altogether unwarranted discount to the intrinsic value of Prime Focus Ltd's shares, says Reliance Capital

Chitranjan Kumar | December 28, 2020 | Updated 16:55 IST
Credit Suisse's stake sale in Prime Focus 'blatant abuse of purported rights': Reliance Capital
Anil Ambani-controlled Reliance Capital raises concerns over Credit Suisse's 33.12% stake sale in Prime Focus

Anil Ambani-led Reliance Capital has alleged that the proposed sale of 33.12 per cent equity shares of Prime Focus by Credit Suisse (CS) at Rs 44.15 per share "is a blatant abuse of the purported rights by the CS under certain lending agreements" with Reliance Anil Dhirubhai Ambani Group.  

Last week, Credit Suisse had signed an agreement with the promoter group of Prime Focus to sell its stake in the company at a price of Rs 44.15 per share aggregating to Rs 463 crore. Credit Suisse to sell 10.5 crore shares, or 33.12 per cent shareholding, of Prime Focus to the London-based Malhotra family, the promoter of the company. These shares were previously owned by Anil Ambani's Reliance Mediaworks Financial Services Pvt Ltd. The shares were pledged to Credit Suisse.

Raising concerns over the proposed sale, the debt-laden financial services holding company said the transaction was being "attempted privately and clandestinely between 2 foreign entities, without any open, fair and transparent process being conducted to realise the true value of the shares and disregarding basic norms of conflict of interest".

"The proposed sale price is at a substantial altogether unwarranted discount to the intrinsic value of Prime Focus Ltd's shares," it said.

On Monday, share of Prime Focus was quoting at Rs 51.80, up 0.78 per cent, against the previous closing price of 51.40 on the Bombay Stock Exchange. During the day's trade the stock hit a 52-week high of Rs 57 apiece.

"The proposed transaction violates several laws, rules and regulations, including inter alia SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, Foreign Exchange Management Act, 1999, and the extant RBI guidelines," RCAP added.

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The company further stated that it will seek all appropriate judicial and regulatory intervention to protect the interests of lenders and shareholders of PFL and Reliance Capital Ltd.

On Thursday, Prime Focus in an exchange filing said that its promoter group had entered into an agreement with Credit Suisse to acquire a 33.12 per cent stake in the company at a price of Rs 44.15 per share.  

Naresh Malhotra and his son Namit Malhotra via their companies, ARR Studio Private Limited and A2R Holdings, respectively, will acquire additional stake in Prime Focus from Credit Suisse via open offer. Following the closure of this transaction, the promoters' shareholding in the company will increase to about 70 per cent.

Also Read: Reliance Capital defaults on HDFC, Axis Bank loans

Naresh Malhotra, Chairman Emeritus and Whole-time Director of Prime Focus is known for producing the Amitabh Bachchan starrer Shahenshah. His son Namit Malhotra, who is the Founder and Non-Executive Director of the company, is the grandson of cinematographer M. N. Malhotra.

Prime Focus is an integrated media services company that provides end-to-end creative services (stereo 3D conversion and animation), technology products and services (Media ERP Suite and Cloud-enabled media services), production services (equipment rental) and post-production services (Digital Intermediate and picture post) to the media and entertainment industry.

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