Guardian Offers To Sell 50% In JV To Modis

US glass giant Guardian Industries has offered to sell its 50% stake in Gujarat Guardian to Modi Rubber (MRL) for Rs 568 crore in a transaction that works out to Rs 72.50 per share.

Modi Rubber holds 22.4% stake in the joint venture.

Guardian’s offer to sell its stake in the JV was made in the context of the ongoing litigation over the proposed subsidiary in the Delhi High Court. The court heard the case on Friday.

Modi Rubber might respond to the Guardian offer on Monday when the HC takes up the case again. Guardian has said the transaction should be completed by January 15, giving Modi Rubber 45 days to pay up.

Modi Rubber had sought an injunction in the HC against the Foreign Investment Promotion Board allowing Guardian to set up a 100% subsidiary. The HC had suggested that the partners should attempt to settle the dispute among themselves.

While the buyout is likely to bring the ongoing Guardian-Modi Rubber dispute to an end, it is unclear if the Rs 568-crore payout can be completed by January 15. It is also not clear how MRL intends to finance the transaction. The Modi group company has been sick for quite sometime and financial institutions hold 44% stake.

IDBI is the operating agency for reviving the company. Part of the resources for reviving MRL was to have been raised by selling MRL’s holding in Gujarat Guardian, according to a revival plan presented to BIFR.

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600450 Guardian Offers To Sell 50% In JV To Modis
Date: 5 December 2006

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