Has anyone checked out this latest notice from them?
http://www.thomascook.in/tcportal/downloads/Letter%20from%20Managing%20Director.pdf
(Pasting the relevant section below, apologies about the incorrect formatting.)
The more i read it, the more it doesn’t seem that right. Would Mr.Isaac know of these nuances while selling stake to Thomas Cook? Also, if this is done once, what’s to say it won’t happen again?
Am i missing something?
“Proposals to retain buy in of Mr. Ajit Isaac
Your Company’s Management believes that in the interest of continued longer term growth and profitability of Quess, it is imperative
that (i) Mr. Ajit Isaac retains the role of being the CEO of Quess and a joint venture partner of the company, as also (ii) remains
a significant shareholder of the company and, therefore, continue to have a strong commitment to enhancing shareholder value.
Responding to the concerns of Mr. Ajit Isaac and to secure his full commitment to the Quess performance, the Board of Quess has
decided to make a Rights Issue of an aggregate of 2,560,000 shares of Rs. 10/- each at a nominal price of Rs. 10/- constituting 8.8%
of the fully diluted equity capital of Quess. Of these, 1,957,302 rights shares are offered for subscription by Thomas Cook, on a pro
3
rata basis, based on its existing holding in Quess. It has been further proposed that your Company would not subscribe to its rights
entitlement of 1,957,302 shares of Rs. 10/- each and renounce them in favour of Mr. Ajit Isaac and/or his nominees. Consequently,
Mr. Ajit Isaac and/or his nominees would thus be able to subscribe to bulk of the Rights Issue entitlement. This would increase his
shareholding in Quess to a level of 28.78% of the fully-diluted equity capital and would dilute the shareholding of Thomas Cook to
66.71% of the fully diluted equity capital (as against 68.04% of the fully diluted equity capital at present).
Rationale for the Proposal
The move to not subscribe to the rights shares and to renounce them in favour of Mr. Ajit Isaac and/or his nominees is primarily
designed to ensure Mr. Ajit Isaac continuing to retain material equity interest in the Company and a commitment on his part to
continue to serve as the CEO of the Company for foreseeable future. The management of your Company believes that these steps,
while in the short term may appear to be dilutive of the interest of Thomas Cook (and consequently its shareholders) in Quess, in
the longer term, Mr. Ajit Isaac’s continued involvement and leadership would provide huge stability to the organization and help
it to maintain its growth momentum and lead to significant value creation for all shareholders, including your Company as the
largest shareholder of Quess.”
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