HOV Services Board Meeting Today to Consider US $ 202 m buyout offer for it’s US and Hong Kong Operations..are they serious ?

Would you believe it !

Just two days ago I blogged on how the Promoters of HOV seem to be hoodwinking shareholders

And just yesterday the company informed the BSE of a Board Meeting to be held Today to discuss the Buy Out Proposal.Have a look at this announcement

Corporate Announcement

Scrip Code:532761   Company:HOV Services Ltd  
 

                     07 October 2008
Subject: HOV Services – Board Meeting on Oct 08, 2008
Announcement: HOV Services Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on October 08, 2008, inter alia, to review an offer received from Recap, LLC (“Recap”) to purchase; (i) all assets (including shares) owned by HOV Services, LLC (“HOVS”), a key subsidiary of the Company incorporated in Nevada, USA, (ii) the entire share capital in HOV Services (Beijing) Ltd (“HOVS B”), presently held by HOVS Holdings Ltd, another wholly owned subsidiary of the Company incorporated in Hong Kong; and (iii) all operating assets used by HOVS and HOVS B owned by the Company. This offer has been received by the Company in continuation of the material transaction notified to you vide the letter dated June 5, 2008.The said transfer, if approved by the Board of Directors, would require the approval of the members of the Company by an ordinary resolution, through a Postal Ballot pursuant to Section 293 (1) (a) and l92A of the Companies Act, 1956 read with the Companies (Passing of Resolution by Postal Ballot) Rules, 2001, and other regulatory approvals.

 Are they really serious? or are they just trying to revive their Share Price which is holding above Rs 60 today even as all World Markets have capitulated…Sensex is down by over 7% and is below 11000…Nikkei 225 has crashed a record near 10% today to close at the lowest in Five Years..yesterday Dow fell 508 points to close also at a Five Year Low.Jakarta Market has been halted as stocks have dropped over 10%  

If the Board approves this Offer and it is passed by an Ordinary Resolution by Shareholders and the Offer actually goes through and Monies are received then each Shareholder should get cash over Rs 150 for every share held and yet Retain the Share as US $ 91 m would be distributed to shareholders

Problem ,as I brought out in the blog day before, is can you trust these Promoters ?.They are also part of the Proposers Group …have they got the US 202 million that they have offered to buy out the US and Hong Kong Operations ? 

With the BFSI Sector in the Doldrums,a big question of Business Sustainability for HOV comes into sharp focus as HOV sources a major part of their BPO and KPO Revenues from clients in this sector

The Directors Report in the Annual Report states that

” Our,independent directors of the Board believe the Material Transaction is potentially in the best interest of the shareholders.However,the Board is not in position to recommend the transaction at this time till it has received advice and clearance from the legal advisor to the Company,investment banker retained to provide valuation advice and tax advisors for determining the overall impact to all stakeholders in regards to the proceeds received and distribution”  

The Directors also state in their Report

 “…macro economic climate has led to uncertainty in regards to satisfactory completion of the transaction”

Since this report was signed on June 5,2008 the economic situation has in fact worsened and put the World on the Edge

Oh ! and interestingly the June 5,2008 dated report also covers a meeting held by Directors on August 26,2008 !…How ?

The outcome of this Board meeting on August 26,2008 had also been conveyed to the BSE as below

Corporate Announcement

Scrip Code:532761   Company:HOV Services Ltd  
 

                     26 August 2008
Subject: HOV Services – Outcome of Board Meeting
Announcement: HOV Services Ltd has informed BSE that the Board of Directors of the Company at its meeting held on August 26, 2008, has considered & approved the following:1. Subject to the required regulatory approval transfer the equity shares of HOV Services, LLC (LLC) to HOVS Holdings Ltd. domiciled in Hong Kong (HOVS HK), a wholly owned subsidiary Company.

2. Obtain clearance from its Legal advisors, investment bankers and tax consultants for previously announced Material Transaction. It was decided to defer the approval till next board meeting to be hold after such advice has been obtained, expected in the next 60 days and thereafter shareholders approval in Extra Ordinary General Meeting.

Should we assume that the Directors have received all Advice sought from their Legal,Investment Banking and Tax Advisors  and are then holding this Board Meeting today ?

Just Keep a Watch on developments

Despite it looking like a Mathematical Win-Win from levels of Rs 60-65 range if this Buy Out goes through,I yet have my doubts on the credibility of all of this…I suspect this is merely a ploy to revive the Share Price to show that the Company and the Group is yet Afloat in these trying times…just Games being Played…Show us the US $ 202 Million first

One thought on “HOV Services Board Meeting Today to Consider US $ 202 m buyout offer for it’s US and Hong Kong Operations..are they serious ?

  1. dera GAURAVJI -iM holding HOVS @167 from 2010, today i read your blog dt 8/10/2008 . i m just curious to know about that deal and amt distribution for clarity regarding promoters mentality. thanks in advance .

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