@ Haputantri -@K.Haputantri wrote:Still I have some reasonable doubts about their action even after reading the lengthy discussion above (Thanks all who contributed) for two reasons-
(1) If the tender procedure is really transparant (as Alchemist insists) no one has any controle over the selling price and to whome it is to be sold (refer to answers of Al to questions 2 & 3). Then how could EXPO decided to sell it to a family company as Alchemist says.
(2) I remember that, there was a serious error (intentional?) in their prospectus at the IPO (corrected later- too late because by that time many had applied) favouring pre-IPO share owners of some private placement of shares at bargain prices. This eroded their integrity over managing public funds.
?Can any one enlighten me on this.
Without knowing the full spectrum of facts, it is very difficult for me to explain with details.
EXPO is essentially a transport / logistics / Freight Company. perhaps they made some strategic blunders and diversified into unrelated business, which they later wanted to rectify.
Some non core business units in the food sector of EXPO were running at losses and with debts and were a drag to core company's profits. however, these units were run / managed by shareholders & related parties of EXPO majority owners. Thus, a decision was made to transfer to one of their private family owned companies. since some of these companies had a negative net worth, the transfer price was an issue. thus this process which was supervised by the independent directors and conducted by a chartered accountancy firm entailed for tenders / bids as if these companies were to be sold to an outside third party in an "arms length" transaction.
Perhaps this exercise was to establish an instrinsic value on the businesses, as some of them had a negative net worth.
i presume EXPO then agreed to transfer to a related party at a price determined at an "arms length" distance which was better that the best bids received.
i know they transferred these businesses at a higher price (to the bids received) to their own private company, rather than divested it to outside unrelated third party at a lower price, and that from EXPO point of view they have done well.
Re the IPO / Pre IPO price matter - i am not aware of the details. can someone clarrify this please ?