SKIL-Everonn deal faces last-minute jitters

MUMBAI: A deal between Nikhil Gandhi’s SKIL Infrastructure and Chennai-based Everonn Education faced uncertainty on Tuesday because of differences over the rights to be enjoyed by the acquirer.

“SKIL’s top brass, including Mr Gandhi, is deliberating on the issue as they found some conditions put by the Everonn board unfavourable,” a person close to the matter told ET late Tuesday evening. “They are likely to decide on the issue by Wednesday morning.” The last-minute jitters provided a surprise twist to what seemed to be a done deal, after the education company’s board approved the plan on Monday. The nub of the dispute is that SKIL does not have veto rights over some management decisions, though ET was not able to ascertain the details.

Despite the lack of certainty, Everonn stock closed marginally higher at Rs 558.9 in a flat Mumbai market on Tuesday, an indication that the market expects the transaction to be eventually completed. The stock fluctuated, hitting a high of Rs 585 and a low of Rs 543. Both companies have agreed on the main features of the deal. SKIL will acquire up to 21% in Everonn through the purchase of optionally convertible debentures (OCDs) and equity shares from an open offer. The existing promoters will hold a marginally higher share of 22%, in Everonn.

They have also agreed that the existing promoters, led by managing director P Kishore, will run the day-to-day operations while Mr Gandhi will support and advice the board. Both Mr Gandhi and Mr Kishore declined to comment on
the matter.

On Monday, the Everonn board approved a plan to sell 4 million optionally convertible debentures (OCDs) to SKIL for Rs 208 crore, or Rs 521 a piece and recognise SKIL as co-promoter.

If SKIL and Everonn finally agree to proceed with the transaction, they are likely to sign an agreement on Wednesday. In that case, SKIL will also simultaneously launch an open offer for the minority shareholders
of Everonn. Under the Sebi formula, the open offer may be priced at Rs 525 a share.

SKIL will buy OCDs in such a manner so that its holding stays at 21% after the open offer. If it manages to get 20% from the minority shareholders through the open offer, it buy OCDs equivalent to 1% of the company, explained the person quoted above.