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TABLE OF CONTENTS SECTION I - GENERAL 1 DEFINITIONS AND ABBREVIATIONS ............................................................................................................ 1 OVERSEAS SHAREHOLDERS .......................................................................................................................... 6 CURRENCY OF PRESENTATION AND FINANCIAL DATA ........................................................................ 7 FORWARD-LOOKING STATEMENTS ............................................................................................................. 8 SECTION II - RISK FACTORS 9 SECTION III - INTRODUCTION 29 THE ISSUE .......................................................................................................................................................... 29 SELECTED FINANCIAL INFORMATION ...................................................................................................... 30 GENERAL INFORMATION .............................................................................................................................. 33 CAPITAL STRUCTURE ..................................................................................................................................... 36 OBJECTS OF THE ISSUE .................................................................................................................................. 41 STATEMENT OF TAX BENEFITS ................................................................................................................... 43 SECTION IV – ABOUT THE ISSUER 50 OUR MANAGEMENT ....................................................................................................................................... 50 SECTION V – FINANCIAL INFORMATION 55 FINANCIAL STATEMENTS ............................................................................................................................. 55 STOCK MARKET DATA FOR THE EQUITY SHARES OF THE BANK .................................................... 82 FINANCIAL INDEBTEDNESS ......................................................................................................................... 84 SECTION VI – LEGAL AND OTHER INFORMATION 86 OUTSTANDING LITIGATIONS AND DEFAULTS ....................................................................................... 86 GOVERNMENT AND OTHER APPROVALS ................................................................................................. 91 MATERIAL DEVELOPMENTS ........................................................................................................................ 92 OTHER REGULATORY AND STATUTORY DISCLOSURES ..................................................................... 93 SECTION VII - OFFERING INFORMATION 100 TERMS OF THE ISSUE ................................................................................................................................... 100 SECTION VIII – STATUTORY AND OTHER INFORMATION 130 DECLARATION ................................................................................................................................................ 132 SECTION I - GENERAL DEFINITIONS AND ABBREVIATIONS Unless the context otherwise indicates or requires, the following terms shall have the meanings given below in this Draft Letter of Offer. Issuer and Industry Related Terms Term Description Articles/ Articles of Association/ The articles of association of our Bank, as amended from time to time. AoA Auditors The statutory auditors of our Bank, being M/s Jagannathan & Sarabeswaran, Chartered Accountants. Board/ Board of Directors/ our Board of directors of our Bank or a duly constituted committee thereof, as the context Board may refer to. “CUB” or “our Bank” or “Bank” City Union Bank Limited. or “we” or “us” or “our” Directors/ our Directors Directors of our Bank. Equity Shares The equity shares of our Bank of face value ` 1 each. Eligible Equity Shareholders The holders of Equity Shares, as on the Record Date i.e. [●]. CUB ESOS Scheme Employee stock option scheme of our Bank as approved by our shareholders at the extraordinary general meeting dated April 26, 2008. Memorandum/ Memorandum of The memorandum of association of our Bank, as amended from time to time. Association Registered and Corporate Office The registered and corporate office of our Bank situated at No.149, TSR Big Street, Kumbakonam 612 001, Tamil Nadu. Issue Related Terms and Abbreviations Term Description Abridged Letter of Offer The abridged letter of offer to be sent to the Eligible Equity Shareholders and made available to Eligible Employees, in accordance with the SEBI Regulations. “Allot” or “Allotment” The allotment of Equity Shares pursuant to the Issue. “Allotted” Allotment Date The date on which Allotment is made. Application Application made during the Issue Opening Date and the Issue Closing Date, whether submitted by way of CAF or in the form of a plain-paper, in case of Eligible Equity Shareholders, or an EAF, in case of Eligible Employees, to subscribe to the Equity Shares issued pursuant to the Issue at the Issue Price including applications by way of the ASBA process. Application Form The CAF and EAF. Application Money The amount payable in respect of the Equity Shares applied for in this Issue at the time of Application pursuant to the Payment Method, being ` [●] per Equity Share, i.e. [●]% of the Issue Price. “ASBA” or “Application Application supported by blocked amount i.e., an Application (whether physical or Supported by Blocked electronic) for Equity Shares in the Issue, together with an authorization to an SCSB to Amount” block the Application Money in the ASBA Account. ASBA Account Account maintained by an ASBA Investor with an SCSB which will be blocked by such SCSB to the extent of the Application Money, as specified in the CAF or the plain paper application, in case of Eligible Equity Shareholders, or the EAF, in case of Eligible Employees. ASBA Investor (i) An Eligible Employee who intends to apply in the Employee Reservation Portion through ASBA; and (ii) an Eligible Equity Shareholder who intends to apply in the Issue through ASBA and: (a) holds the Equity Shares in dematerialized form as on the Record Date and has applied for his Rights Entitlement and/ or additional Equity Shares in dematerialized form; (b) has not renounced his/ her Rights Entitlement in full or in part; (c) is not a Renouncee; and (d) is applying through the ASBA Account. Bankers to the Issue [●]. 1 Term Description “CAF” or “Composite The application form used by Investors (excluding Eligible Employees) to make an Application Form” application for Allotment under the Net Issue portion. Call Call notice sent by our Bank to each of the holders of the partly paid-up Equity Shares as on the Call Record Date, for making a payment of Call Money. Call Money Aggregate amount payable in respect of the Equity Shares applied for in this Issue at the time of the Call pursuant to the Payment Method, being ` [●], i.e. [●]% of the Issue Price. Call Record Date The date fixed by our Bank for the purpose of determining the names of the holders of partly paid-up Equity Shares for the purpose of issuing of the Call. Controlling Branches The branches of the SCSBs which coordinate with the Registrar to the Issue and the Stock Exchanges and a list of which is available at http://www.sebi.gov.in. Designated Branches Such branches of the SCSBs which shall collect the CAF or the plain paper application, in case of Eligible Equity Shareholders, or the EAF, in case of Eligible Employees, from the ASBA Investors and a list of which is available on http://www.sebi.gov.in. Depository A depository registered with the SEBI under the Depository Regulations. Designated Stock Exchange [●]. Draft Letter of Offer This draft letter of offer dated July 17, 2012 filed with SEBI and issued by our Bank in accordance with the SEBI Regulations. “Employee Application Form” The application form used by Eligible Employees to make an application for Allotment or “EAF” under the Employee Reservation Portion. Eligible Employee A permanent and full-time employee of our Bank including a Director of our Bank, whether whole-time or part-time, as on the Record Date, who is an Indian national and is based, working and present in India as on the date of submission of the EAF and who continues to be in such employment till the finalisation of the basis of Allotment in consultation with the Designated Stock Exchange, but excludes persons not eligible under applicable laws, rules, regulations and guidelines. Employee Reservation Portion Reservation of up to [●] Equity Shares (not exceeding 5% of the post-Issue capital of the Bank) for the Eligible Employees aggregating up to ` 50 crores. Investor(s) Eligible Equity Shareholders, Renouncee(s) and Eligible Employees applying in the Issue. Issue Issue of [●] Equity Shares at Issue Price aggregating up to ` 250 crores to the Eligible Equity Shareholders and Eligible Employees. The Issue comprises of issue of [●] Equity Shares to the Eligible Equity Shareholders in accordance with the Rights Entitlement aggregating up to ` 200 crores and a reservation of up to [●] Equity Shares (not exceeding 5% of the post-Issue capital of the Bank) for the Eligible Employees aggregating up to ` 50 crores. Issue Closing Date [●]. Issue Opening Date [●]. Issue Price ` [●] per Equity Share. Issue Proceeds The proceeds raised through the Issue estimated to be ` 250 crores. Lead Manager Edelweiss Financial Services Limited. Letter of Offer