RCAP group will seek judicial and regulatory intervention to protect the interests of lenders and shareholders of Prime Focus Ltd (PFL) and Reliance Capital Ltd with respect to the stake sale of Credit Suisse (CS) to PFL promoters.

Mandatory open offer

Following the agreement with Credit Suisse, the promoters have made mandatory open offer to the public shareholders of PFL. In a notice to the stock exchanges, Prime Focus said acquirers have made open offer for up to 8.24 crore shares, representing 26 per cent of the expanded voting share capital.

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These shares, which were earlier owned by Anil Ambani’s Reliance Mediaworks Financial Services Pvt Ltd, were pledged to CS. Last week, Credit Suisse had signed a share purchase agreement with the promoter group of Prime Focus to sell its stake in the company at ₹44.15 a share aggregating to ₹463 crore.

‘Blatant abuse’

In a statement on Monday, RCAP group said the proposed sale of 33.12 per cent equity of PFL by CS at ₹44.15 a share is a blatant abuse of the purported rights by CS under certain lending agreements with RCAP group.

“The proposed sale is being attempted privately and clandestinely between two 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,” Reliance Capital said, adding that the proposed sale price is at a substantial altogether unwarranted discount to the intrinsic value of Prime Focus Ltd’s shares”.

It further said 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.

Currently, the promoter group owns 34.96 per cent stake in PFL. Among the public, Augusta Invetments I Pte Ltd holds 9.77 per cent, while some 10,000 small investors 3.63 per cent. IDBI Trusteeship Services holds 24.49 per cent stake and Reliance Mediaworks Financial Services 10.57 per cent .

The stock of Prime Focus opened at ₹50 on the BSE, as against the previous day’s close of ₹51.40 but fell to a low of ₹48.60. However, it recovered to touch a high of ₹57 before ending at ₹51.80.

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