Document Fragment View

Matching Fragments

25. There is also a substantial compliance with rule 85 of the Rules as the proposed reduction of the share capital is already approved by the shareholders unanimously and the creditors have given their consent for the proposed scheme of arrangement. For this purpose, it is necessary to take into consideration the contents of the letter dated December 9, 1994, addressed to the transferee company by the IDBI, by which is communicated its "no objection" to the proposed reverse merger of the transferor company with the transferee company with effect from April 1, 1994, on the terms contained in the scheme of merger with a share exchange ratio of five fully paid-up equity shares of the face value of Rs. 10 each of the transferee company for every one fully paid-up equity share of the face value of Rs. 10 each of the transferor company. It has also been stated in the said letter that the conversion option resting with the institutions in respect of terms loans sanctioned to the transferee company would be exercised after the merger. If the formalities regarding the merger are not completed by the last date of exercise of conversion in terms of the loan agreements executed, the period of conversion shall get automatically extended by the time taken for completion of the merger formalities from the date of its letter. Lastly, it is mentioned in the said letter that the approval is given on behalf of all the participating financial institutions. By another letter of the IDBI dated May 18, 1995, addressed to the transferor company stating that during the meeting of the institutions to consider the merger proposal, it was decided that for arriving at the exchange ratio, the high and low figures of market quotations for the last one year for both companies may be considered along with the calculations done by Lovelock and Lewis. Based on the same, the exchange ratio of one share of Novopan India Limited for five shares of GVK Hotels Limited has been arrived at. By letter dated August 16, 1995, the IDBI confirmed that the merger scheme approved by them included reduction of share capital of GVK Hotels Ltd. by 4/5ths, i.e., from Rs. 1,478.75 lakhs to Rs. 295.75 lakhs. The Canara Bank by its letter dated August 11, 1995, addressed to the transferor company stated that, "we, the lead banker, hereby convey court approval for the reverse merger as well as the reduction of share capital of GVK Hotels Limited from Rs. 1,478.75 lakhs to Rs. 295.75 lakhs". The Canara Bank by another letter dated August 14, 1995, addressed to GVK Hotels Limited stated that it approved of the reverse merger subject to certain conditions, such as similar approval by other member institutions, the IDBI and other connected authorities. The merger should not result in dilution of securities given to the bank, and after the merger, the total borrowings of the company should be within the MPBF of the merged company under lending method II. The company should submit for approval of the High Court the merger proposal and that merger would be subject to the approval of the shareholders and such others as may be required.