Jetwing Hotels will have to make the mandatory offer with regard to their recent transaction with Chemanex in Lighthouse Hotel shares, the Securities and Exchange Commission (SEC) said.
“The Attorney General’s (AG’s) Department having heard the Jetwing lawyers concluded that there is no legal basis to vary the original SEC view,” Udayasri Kariyawasam, Chairman SEC told The Sunday Times FT, adding that this position was communicated to Jetwing on Thursday.
Jetwing Managing Director Hiran Cooray said they were studying the SEC decision to consider the next course of action.
Jetwing controls 37% in Lighthouse Hotels after buying a near 7% stake from Chemanex in late March. It took the position that it was acting in concert with Hayleys under an old agreement, thus not triggering the 30% control level which requires making a mandatory offer to secure all other shares in the company. The rule doesn’t apply if parties are acting in concert.
Jetwing and Carbotel, a subsidiary of Hayleys entered into an agreement in 2003, to ‘act in concert’ in holding shares in Lighthouse. Both parties jointly held over 50% in the company.
When Jetwing bought the Chemanex stake on March 30, the SEC by letter on April 1 asked both firms whether they were acting in concert in the transaction.
Jetwing informed the SEC by letter on April 17 that they are, but Hayleys disagreed saying there was no consent on their part in this transaction. Hayleys also said, by letter, that the agreement was being abrogated.
Accepting Hayley’s vie, the SEC then ruled that Jetwing needs to make a mandatory offer. Jetwing then made representations to the SEC and requested then to reconsider the decision, after which the matter was referred to the AG.