NDTV on Thursday argued that Adani Group firms cannot yet acquire a stake in the television channel’s parent entity, citing a November 2020 ruling by the markets regulator which barred the NDTV founders from accessing capital markets for two years in a case of insider trading.
Adani group firms would need to secure a Securities Exchange Board of India (Sebi) approval to acquire shares in promoter entity Vishvapradhan Commercial Private Limited (VCPL), NDTV claimed in a regulatory filing on Thursday morning.
The Roys were prohibited from accessing the securities market in any manner for a period of two years till November 26, 2022, because a SEBI order restrained "the Founder-Promoters Dr. Prannoy Roy and Mrs. Radhika Roy from accessing the securities market, and further prohibiting buying, selling, or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner whatsoever for a period of 2 years.”
As a result, NDTV has reasoned that Adani cannot yet acquire 99.5% stake in VCPL as this will also lead to the acquisition of voting rights equivalent to 29.18% stake in NDTV, through RRPR Holdings. RRPR Holdings is owned by Radhika Roy and Prannoy Roy.
On August 23, Adani Group companies said they had acquired the stake in NDTV indirectly by buying VCPL, which owned convertible debentures (warrants that provide for the conversion of debt to equity) in RRPR Holding Pvt. Ltd that in turn owned 29.18% of NDTV Ltd. Vishvapradhan acquired the debentures in 2009-10 in return for a loan amounting to ₹404 crore it extended to the promoter holding company.
Following this, Adani Group and Vishvapradhan announced an open offer at ₹294 per share (based on Sebi’s takeover guidelines), representing a 28% discount to NDTV’s ₹376 closing price on Tuesday.
NDTV immediately protested the move and said that " this exercise of rights by VCPL was executed without any input from, conversation with, or consent of the NDTV founders.”
In November 2020, Sebi had investigated two separate cases against promoters of NDTV. While one involved loans taken by promoters of NDTV from Vishvapradhan Commercial Pvt. Ltd, the other included a case of insider trading.
In both of these orders Sebi had imposed a ban of two years on the promoters. They were restrained from accessing the capital markets. SAT on 20 July this year had overruled the ban in the VCPL loan case stating that the findings and directions are not sustainable.
However, the order in the case of insider trading is still in appeal at SAT.
The matter pertains to Sebi findings that Prannoy Roy and Radhika Roy indulged in insider trading in the scrip of NDTV between September 1 2006 to 30 June 2008.
During this period NDTV underwent a reorganisation exercise to unlock shareholder value and promote focused growth of its various businesses. It involved demerger and splitting the company into two verticals ‘news related business’ and ‘beyond news’.
Sebi alleged that the Roys had together bought 48,35,850 shares of NDTV on 26 December December 2007, for a value of Rs 19,34,34,000.
By dealing in shares of NDTV while in possession of unpublished price sensitive information (UPSI) the Roys have violated the provisions of insider trading, said the market regulator in its order on 26 November 2022.