Its a paid article, a summary of the content is
- Details of the order passed by NCLT, already discussed above
- Next steps according to unnamed sources – IBREL will be challenging the order before NCLAT. It realizes that it will be a complex process and is already working towards it.
Even after it became evident a few months ago (after reading the NCLT orders during the proceedings) that the valuation exercise was a joke and the swap ratio was decided to benefit Embassy, I was hoping that NCLT approves the merger, obviously with a hope to recoup my losses.
Mr. G was never known for good Corporate Governance, I had heard that Embassy’s Mgmt was good. Hence I bought. Very expensive lessons learnt
a) never buy based on hope/story – Chor bane Mor
b) never buy a stock if the management is a known crook, even if its an outgoing one
c) never buy if a stock is very popular on Twitter with many ‘Gurus’ calling it special situation stock
Obviously, behind the sham valuation exercise must have been a quid pro quo between G and V (something like – the underpriced selling of IBREL land to G’s unlisted companies)
Both G & V have been caught with their hands in the cookie jar and if what’s in the article is true (actually I just saw the company has confirmed), they are so shameless that instead of atleast now doing the right thing, they want to appeal to NCLAT. Wow!
I am not a legal or M&A expert so some of the below might be naive, I have been wondering that eventhough NCLT has not approved the merger, but for all senses and purposes IBREL is headed by Embassy Management for many months, so why
A) They have not been running IBREL like a proper going concern, they hardly did any business since last couple of quarters. All they have been doing is selling some land parcels and paying out debt. As far as I know, they have not even announced when the Q4 results will be declared.
B) If their excuse for not launching any new projects in the last few months is that they want the new projects to be under the Brand name of Embassy, what stops them from changing IBREL name to Embassy XXXXX? You don’t need NCLT approval to change names, no?
C) Both the parties have made IBREL stock radioactive, no big party in the stock market will be willing to touch it with a barge pole, so why don’t the Embassy management raise their stake via Open market rather than playing games, especially after being called out by IT dept and NCLT. I know the earlier mechanism was cashless for Embassy management, this will involve outgo of cash of around 1000 cr (as per current valuation) to increase stake by around 30%. I see why they wont do it – why pay 1000 cr when you can have it cashless by just a) swapping shares for free with your inflated shares of NAM b) paying off G by letting him buy IBREL assests for dirt cheap and letting him not pay back IBREL loans Too bad for them that IT dept came in to spoil their well laid out plan
D) Right thing to do – As they raise their stake via legal means (if they do), they can run IBREL business properly and then later amalgamate NAM Estates when they have done their valuations properly (if they are still interested). Why delay and run down IBREL? So that swap ratio is favorable to Embassy? A loss-making IBREL will fetch them a favorable swap ratio (once NCLAT also rejects the request and they have to re-do the swap calculations)
I know some of the IBREL shareholders like to see the positive side. Apologies if you find anything I have written offensive. My hope was that if Embassy Management is as honorable as they were made out to be by many when the news of the merger news came out, they will atleast now do the right thing. But seeing them going ahead to NCLAT disappoints me. I hope I am wrong and its indeed the right step and the Management is really better than what I think.
I prefer to be wrong and rich rather than proven correct and lose money.
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