Financial Daily from THE HINDU group of publications
Tuesday, Dec 31, 2002
Financial Daily from THE HINDU group of publications Tuesday, Dec 31, 2002 |
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Radio/TV Corporate - Overseas Borrowings Zee shares to be pledged with CSFB — Subhash Chandra to raise $40-m loan via OCB Ambarish Mukherjee
NEW DELHI, Dec. 30 IN a major move to raise funds, the Subhash Chandra group has finalised plans to pledge equity shares of Zee Telefilms Ltd with the Zurich-based Credit Suisse First Boston Corporation (CSFBC) for a three-year term loan of $40 million. According to the plans, Delgrada Ltd, a Mauritius-based overseas corporate body (OCB) owned by Mr Subhash Chandra will pledge five crore equity shares of Zee Telefilms, having a face value of Re 1 each, with Credit Suisse First Boston, Singapore, a wholly-owned subsidiary of the Zurich-based global banking and insurance giant. As per the provisions laid down in the plan, in case the OCB is unable to repay the loans within the stipulated time-frame of three years, CSFB will have the right to invoke the pledge and acquire ownership of the equity shares paving the way for having a substantial ownership in one of India's premier media and television companies. The company has already received a formal clearance for the proposed transaction from the Reserve Bank of India subject to a mandatory approval from the Foreign Investment Promotion Board (FIPB) in the event of invocation of the pledge by CSFB because the issue involves change in foreign ownership of equity shares. The company has approached the FIPB for prior approval of the proposed transfer of ownership of equities from the present owner, Delgrada Ltd to CSFB, Singapore, along with a request for an extended three-year validity of the approval. The normal validity for all FIPB approvals is two years. It may be interesting to note that both the companies - - Delgrada Ltd and CSFB (India) Securities Private Ltd, the Indian subsidiary of the Zurich-based CSFB Corporation - - have come under the scanner of Indian regulators for their various activities in the country. According to reports, a study conducted earlier this year on 13 OCBs showed that their collective activities had cost India around Rs 3,850 crore between April 1999 and May 2001. One of these 13 OCBs is Delgrada Ltd which has a paid-up capital of $1. Incorporated in April 2001, records showed that the company had taken out around Rs 476.12 crore out of India. Similarly, CSFB (India) Securities too, is facing prosecutions initiated by the Department of Company Affairs (DCA) for alleged violations of some of the provisions of the Companies Act, 1956. Earlier this year, DCA had initiated prosecution against the company for not mentioning the names of SSI creditors in its balance sheet for financial years 1998-99 and 1999-2000 as well as for not providing the break-up of payments to directors, including the managing director, in its balance sheet. The company is also facing charges for providing higher rates of depreciation on the straight line method than what is permitted under the law. The DCA has also filed prosecution against the company for failing to disclose information on thr share capital held by its holding company.
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