Reliance ties up 50.5% vote for Flag takeover

MUMBAI: Reliance has got the beneficial ownership of an additional 4.8% shares of Flag Telecome after it entered into an agreement with a third shareholder, Jackson National Life Insurance Company. According to the terms of the agreement, Reliance will pay Jackson shareholders about $125,103.69 in exchange for a vote in its favour at the shareholders meeting scheduled for January 12, ’04. With this agreement, Reliance is now deemed to beneficially own 50.5 % shares of Flag.
This is the third agreement Reliance has entered into with Flag shareholders. Earlier it had entered into a tieup with two sets of shareholders — Harbert, which owned 37.1% of shares and Triage, which owned 8.6% of shares. These two agreements ensured Reliance a beneficial vote of 45.7% of Flag’s shares.
According to the terms of the amalgamation agreement between Reliance Gateway Net, a Reliance group company and Flag, if 30% or more shareholders vote against the agreement, the deal would stand cancelled.
But Reliance has already secured a 50.5% beneficial vote so far. Reliance needs the approval of 75% of the shareholders that attend the special shareholders meeting which needs a quorum of 50% of all shareholders.
A filing with the US Securities and Exchange Commission (SEC), stated that Reliance had entered into an agreement with Jackson for 95,499 shares of Flag owned by the latter. Flag has about 2,000,000 outstanding shares as of October 16, ’03, the date when Reliance first entered into an agreement with Flag to buy out the latter.