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Sierra Atlantic to acquire majority stake in Optima -- Fresh EGM tomorrow as SEBI norms change

C.R. Sukumar

HYDERABAD, Jan. 4

SIERRA Atlantic Inc., the US-based application networks company, is set to acquire a controlling stake in Sierra Optima Ltd (SOL), the Hyderabad-based software solutions company, through the preferential allotment route.

The SOL board had approved a proposal to make preferential offer to the US company, enabling the latter to enhance its stake to 54.9 per cent stake in the Indian company from the current level of 25.52 per cent.

Earlier, the SOL board had proposed to offer 21.5 lakh optionally convertible debentures (OCDs) of a face value of Rs 312 each carrying an option to convert them into 21.5 lakh equity shares of the face value of Rs 10 each. The conversion price of Rs 312 per share was worked out in accordance with the SEBI guidelines on preferential offers.

With a view to obtaining the approval of its shareholders for the proposed preferential offer, Sierra Optima had called for an extraordinary general meeting (EGM) of its shareholders on December 18, last year. To this effect, the company had given a noti ce dated November 22 to its shareholders.

However, the Sierra Optima board realised later that SEBI had carried out certain amendments to its guidelines on preferential offers. According to the new guidelines, the securities convertible into equity shares at a later date shall be made fully paid -up at the time of their allotment itself.

As against this, the proposed issue of OCDs to the US company was structured with an upfront payment of 15 per cent upon allotment of OCDs with the balance 85 per cent being payable upon conversion of the OCDs into equity shares.

Keeping in view the changed guidelines on preferential issues, the Sierra Optima board met on December 10, eight days before the scheduled EGM, and decided to withdrew the notice of EGM that was scheduled for December 18. In the light of the amended guid elines for preferential issues, the board has decided to offer 21.5 lakh warrants to the US company to be convertible into equity shares of the face value of Rs 10 each at a price Rs 312 per converted share.

Accordingly, it has called a fresh EGM to be held on Friday (January 5) here to seek the consent of its shareholders for the issue of warrants instead of OCDs on a preferential allotment basis.

The preferential allotment of warrants to the US company and the subsequent conversion upon full payment on the warrants, within a period not exceeding 17 months and 15 days, would enable the US company to enhance its equity holding in the Indian company to 54.9 per cent of the post-offer capital from the current level of 25.52 per cent. Accordingly, the post-preferential offer shareholdings of FIIs, FIs, corporate bodies, MFs and others would come down.