MUMBAI: The Securities and Exchange Board of India (SEBI) has paved the way for repurchase of shares by ETC Networks Ltd. The market regulator has granted exemption to Zee Telefilms Ltd. (ZTL) and Asian Satellite Broadcast Pvt. Ltd. from making an open offer regarding increase in their voting rights from 54.42 per cent to 58.73 per cent.
"Pursuant to the said increase in voting rights, there would not be any change in control of the target company (ETC Networks). The application seeking exemption was forwarded by SEBI to the takeover panel. The panel recommended for exemption to the acquirers from making an open offer," SEBI says in a release.
ZTL and Asian Satellite Broadcast (referred to as ‘the acquirers’) are the promoters and collectively hold 54.42 per cent in ETC.
"The repurchase of shares by ETC is aimed at increasing shareholder value. We plan to exercise the buyback programme after getting the necessary approvals," says Essel Group CEO of corporate strategy and finance Rajiv Garg.
ZTL and Asian Satellite Broadcast (holding company of the Group) had, on 13 June 2006, filed an application with the SEBI. "ETC Networks has announced to buy back up to 10 per cent of its total paid up equity capital and free reserves at a price not exceeding Rs 62 per share in compliance with the provisions of sections 77A and 77AA of the Companies Act 1956 and provisions of SEBI (Buy-Back of Securities) Regulations, 1998. In view of the said buy back, the holding of the acquirers would increase from 54.42 per cent to 58.73 per cent of the total paid up capital of the target company. As the shareholding of the acquirers would increase beyond 55 per cent of the issued capital of the target company, the acquirers have sought exemption from the provisions of Chapter III of the Takeover Regulations," the letter said.
The aim of the share repurchase programme is reduce the paid up share capital and improve earnings per share (EPS). This will be beneficial to the shareholders in the form of higher dividend pay out and increased EPS.
