Sebi denies it sent letter on Pyramid’s open offer

Sebi denies it sent letter on Pyramid’s open offer
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First Published: Tue, Dec 23 2008. 11 14 PM IST

Wrong note? Pyramid Saimira MD and chairman P.S. Saminathan.
Wrong note? Pyramid Saimira MD and chairman P.S. Saminathan.
Updated: Tue, Dec 23 2008. 11 14 PM IST
Mumbai: The owner of nearly 800 movie theatres in India and abroad, Pyramid Saimira Theatre Ltd (PSTL), will file a complaint with the Chennai police alleging fraud, after it found a letter—supposedly from the country’s capital markets regulator—had been forged, a top official said.
The Business Standard newspaper reported on Sunday that the Securities and Exchange Board of India (Sebi) had directed the Chennai-based company to make an open offer to buy 20% of its shares at not less than Rs250 each from the market within 14 days, as the company’s promoter had acquired more than 5% equity in 2008.
Wrong note? Pyramid Saimira MD and chairman P.S. Saminathan.
On Tuesday, Sebi said it had not issued the letter, after which Pyramid Saimira claimed the letter was forged.
Pyramid Saimira has asked Bombay Stock Exchange (BSE) and National Stock Exchange to investigate the trades during the period to find who benefited from the transactions, chairman and managing director P.S. Saminathan said over the telephone from Chennai.
Saminathan said Pyramid wrote to BSE on Monday morning saying it hadn’t received any communique from Sebi.
On Tuesday, Pyramid wrote again to BSE saying Saminathan had received an advisory from Sebi to file a prospectus for the open offer.
“It appears that the said letter is being circulated with ulterior motives,” Sebi said in a statement on Tuesday. The regulator also said it was separately investigating the origin of the letter and the dealing in the scrip, including alleged violation of Sebi (Substational Acquisition of Shares and Takeover) Regulations, 1997.
“This the first time something of this sort has happened, at least in my career,” said a senior Sebi official who didn’t want to be named since it is against the regulator’s policy. He has been with Sebi for five years.
On Tuesday, the Pyramid scrip hit the lower circuit breaker, after its shares fell by 10%, following a similar fall on Monday. From 1 December to 9 December, Pyramid’s share price had increased 105.17%.
“We did not receive any letter till Sunday, but a section of the media had the letter from Friday. On Monday (afternoon), we received a courier and immediately enquired with the regulator’s takeover department. Sebi said they had not sent any such letter asking me to make an open offer,” Saminathan said. “We want to find out who is behind this forgery of Sebi document and who all benefited from the act.”
The alleged forgery has also scuttled a purchase agreement between Saminathan and his private investor Nirmal Kotecha, who owns a 22% stake in Pyramid Saimira.
Saminathan, who owns 24% in the company, had agreed to purchase Kotecha’s stake at market rates or Rs200 a share, whichever was lower.
The purchase agreement between the two was signed in October and was to be executed on 22 December, a day after the Business Standard report.
Saminathan says he had purchased 4.9% in June from Kotecha for Rs250 a share, a price arrived after an internal valuation by the company.
“The purchase agreement with Kotecha is off,” Saminathan said.
Kotecha did not respond to text messages regarding the development.
Baiju Kalesh, Ravi Krishnan and Khushboo Narayan contributed to this story.
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First Published: Tue, Dec 23 2008. 11 14 PM IST