IPO prospectus error forces Coal India to offer exit


Stating that there were certain inadvertent errors that crept into its offer document, Coal India on Thursday offered its investors time till October 25 to reconsider their decision to take part in its IPO.

“…It is clarified that on account of typographical errors in the company’s standalone summary statements of profit and loss (restated), the amount shown under accretion in stock and other income for the quarter ended June 30, 2010 on pages…of the Red Herring Prospectus were inadvertently interchanged with each other….In view of the above, kindly note that the bidders including QIB bidders, if they so desire, may withdraw their bids. The request for withdrawal of such bids shall be received on or before 5:00 PM on October 25, 2010,” said in a statement to the Stock Exchange which coinciding with the final day of public offer.

Market experts said that whenever there are any changes made in the prospectus of IPO-bound companies, regulatory norms mandate them to make public announcements and give investor an option to withdraw bids. “It is not the first time such a thing has happened. In such scenarios, generally investors have not been seen withdrawing their bids,” a merchant banker said.

Among many such IPOs, VA Tech Wabag had given investors the option to withdraw their bids in its recent share sale as certain errors came to light in its offer documents.

“Generally speaking, we have not seen investors withdrawing their bids from the company due to this,” the banker said.
Meanwhile, Coal India maintained that there has been no change in the total income of the company or the company’s standalone summary statement of profit and loss in the offer document due to the error.

[Story Source] [Contest win Rs 1000-100,000 now]

This post was submitted by Chinmaya Kumar Nayak.

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