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| Exchange Disseminated Time | Celebrity Fashions Ltd has informed BSE that the Honorable High Court of Madras, in its final hearing on August 17, 2010, has sanctioned the Scheme of Arrangement between Celebrity Fashions Limited and Indian Terrain Fashions Limited and its respective Shareholders and Creditors for the demerger of Indian Terrain Division into a separate entity, Indian Terrain Fashions Limited. The Court has sanctioned the Scheme in toto except Part III of the Scheme which relates to the Slump Sale of the Bottoms Division to Celebrity Clothing Limited. The Orders are reserved by the Honorable Judge for his chambers' dictation and is expected to be promulgated in about 1-2 weeks time.
The Board of Directors have decided to retain the Bottoms Division with Celebrity Fashions
Limited itself and not to give effect to the proposed slump sale of the same into Celebrity Clothing Limited as envisaged in the composite scheme of arrangement between Celebrity Fashions Limited, Celebrity Clothing Limited and Indian Terrain Fashions Limited.
It is in the interest of all stakeholders, the Bottoms Division is not being transferred to Celebrity Clothing Limited considering the following:
The Company initiated the process of Re-structuring during August 2009 and the Company obtained the Secured Creditors approval during June 2010 as against the plan of January 2010.
The basic objective behind the transfer was to attract strategic / financial investment but the same did not materialize and in the absence of strategic investment, having Exports division (comprising of Tops and Bottoms division) under the same company would result in administrative efficiencies and lesser regulatory compliance formalities
In the absence of strategic investment having multiple entities in similar line of business will result in duplication of efforts and as a consequence increase the operating costs. It was also noted that Celebrity Clothing Limited is a wholly owned subsidiary of the Company and also the consideration for transfer was arrived at based on the net assets of the Bottoms division and accordingly, the transfer or non-transfer would not have any major implications on the consolidated position of the Company.
Hence pursuant to Clause 25 of the Scheme providing for the modification or amendments to the Scheme and subject to the sanction of the High Court of Judicature at Madras and obtaining of other requisite approvals, the Board decided that PART III of the Scheme dealing with the Transfer of the Bottoms Division by way of Slump Sale into Celebrity Clothing Limited be not given effect to, such that the Bottoms Division shall continue to remain with the Company. Accordingly, the affidavits were filed by the Companies and the Court upon hearing has sanctioned the modified scheme of arrangement. |
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