Friday, March 12, 2010

Zenotech Update - Final closure

The case hearing has finally concluded :-). We should hopefully have the judgement within a week bringing to close a long drawn saga. The link to the earlier post is given below

From the Supreme Court site
UPON hearing counsel the Court made the following
Mr. F.S.Nariman, learned senior counsel, made his submissions from 10.35 a.m. to 12.40 p.m. Mr.Ashok Desai, learned senior counsel, thereafter, made his submissions for fifteen minutes. Mr.C.A.Sundaram, learned senior counsel, thereafter, advanced his arguments upto 3.05 p.m. Learned Attorney General made his submissions for about fifteen minutes.
Hearing concluded. Judgment reserved.
Liberty to parties to file written submissions within one week.


gaurav said...

Hi Ninad,

I've been reading your posts for sometime. Congratulations for spotting the ripe special situations. I was following zenotech as well and now feel the judgement should be out any moment a week from now to 4 weeks from now which certainly is good interms of cost of opportunity. I feel that chigurupati has good odd's of winning the case because common sense says that you need to assess what liabilities would your new partner bring in along with the assets. Daichi cant be blind about its new partner's aquisition of zenotech shares just 5 months before the handshake announcement. If the judgement goes infavour of zenotech, its shareholders are bound to benefit by 40% on his 40% holding (assuming his cost of buying the shares is close to 120 and open offer comes close to 170 -- this includes interest which Daichi has agreed to pay incase proven wrong-- and assuming rest 50% of shareholders tender their shares). Now the question is what about his rest 60% holding. The stock is bound for free fall from 170 after the open offer because the company's financials are a complete mess. Just wanted to know your thoughts on the company trading above 90 bucks after the open offer ?

Cheers, Gaurav

Ninad Kunder said...

Hi Gaurav

Its a interesting question that you have posed.

This is a classic case of game theory where we have to understand what each of the particpants will do. In the numbers that u have stated u r assuming that Dr Chirugappati will tender in the open offer.

The current promotor group owns nearly 26% shares in the company and hence in a position to have veto power over special resolutions even if Daiichi is to takeover. Why would Chirugapati tender and dilute his stake and hence his bargaining power and effective control of the company?. If he has to do that he might as well sell his entire stake to Daiichi thru a side deal once the court judgement comes. For Daiichi also it makes sense to buy him out compeltely as opposed to having a thorn in the company.

So I would assign a high probability to Chirugapatti not tendering and hence a higher acceptance ratio.



Anonymous said...

Ninad - Do you have any update on this case?

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