Companies controlled by business tycoon Harry Jayawardena last week admitted that by an oversight they had failed to make a mandatory offer on Lanka Milk Foods Plc way back in September 2011.
The bizarre development, which also exposed the failure by the regulators, Melstacorp Ltd., said that as at 12 September it (0.79%) together with its parent Distilleries (33.57%) and Milford Exports (1.9%) acting in concert was holding 14.5 million shares or a 36.27% stake in LMF.
On 13 September a further 5% stake or two million shares of LMF had been bought at Rs. 105 each by the connected parties. This purchase increased the connected parties’ stake to 41.27%.
“However due to an oversight, the Offeror failed to make a Mandatory Offer in September 2011 to purchase the remaining 23.49 million shares, constituting 58.73% of the issued shares of Lanka Milk Foods at the time it triggered the Code,” Melstacorp Secretaries P.W. Corporate Secretaries said in a filing to CSE last week.
The disclosure came after Mesltacorp on 15 February purchased 3.54 million shares or a 8.85% stake in LMF. As exclusively reported by the Daily FT on 16 February, the bulk of the purchase was at Rs. 99 per share.
The PW Corporate Secretaries in their filing said that when Melstacorp sought to determine the highest paid price paid during the 12 months preceding 15 February 2012, it had transpired that Mesltacorp had incurred a similar obligation on 13 September 2011, i.e. five months earlier.
The Secretaries had notified this oversight to the SEC on Thursday for a determination as to the shareholders to whom the offer should be made and the offer price at which the offer should be made.
The Secretaries also stated that L.U.D. Fernando, a Director to the connected parties, had on 13 September purchased 20 shares of LMF from the Odd Lots at a price of Rs. 119 per share. However, Fernando is currently not a connected party as he ceased to be a director from 8 December 2011.
Prices at which shares transacted as Odd-Lots are not considered in computing the highest and lowest price in determining the mandatory offer, hence Melstacorp has sought a due determination from the SEC on the offer price as well.
As per accounts ended on December 2011, Harry J-linked Milford Exports was the biggest shareholder with a 33.57% stake whilst Melstacorp prior to recent purchase had a 5.79% stake whilst its parent Distilleries had a 1.9% stake. These combined holdings give Harry J an estimated slightly above 50% control in LMF. The other major shareholder is Mills Enterprises Ltd., which owns 15.3%.
source - www.ft.lk
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