As per Alcan's revised offer letter, dated April 29, to Indal's shareholders, raising its offer to Rs 120 per share against Sterlite's 115, the Canadian major has provided Rs 350.67 crore to acquire 20 per cent or 14,222,400 shares of Indal.

Alcan needs Rs 170.67 crore to pick up the extra 20 per cent at Rs 120 a share. For this, it has to furnish a Rs 32-crore bank guarantee as per the Securities & Exchange Board of India's takeover code.

However, as the offer letter shows, Alcan has secured a bank guarantee of Rs 50 crore. The excess of Rs 18 crore happens to be 10 per cent of Rs 180 crore, which added to the given acquisition cost works out to Rs 350 crore.

The code specifies that, for a cash consideration of up to Rs 100 crore for an acquisition, the companymaking the offer has to keep 25 per cent as bank guarantee. For any additional amount over Rs 100 crore, the acquirer has to set aside 10 per cent of the extra as a bank guarantee or in escrow. The code also makes it compulsory for the acquirer to keep 1 per cent in escrow.

In Alcan's case, the excess of Rs 18 crore can fetch a further amount of shares if the need be.

Alcan has noted that the total funds required to pay the cash consideration for accepting shares is Rs 170.67 crore. For this, it has made arrangements with Citibank NA of Canada. The bank has confirmed that, based on the amounts available with it, Alcan has sufficient funds to implement the offer.

Alcan's offer letter says the financial arrangements do not include borrowed funds, and that it has bank guarantees for Rs 50 crore with Citibank at Mumbai. This amount would be valid up to 30 days after the closure of the offer.Assuming a full response of 20 per cent to the offer, the post offer stake would be 54.6 per cent of Indal shares,numbering 38,841,365 shares, against Alcan's present stake of 34.6 per cent (24,618,968 shares).

The offer, highlighting the Indal scrip's performance, says that the ratio between the annualised trading turnover and the total number of equity shares listed is about 2.20 which shows that "the equity shares of Indal cannot be deemed to be infrequently traded".

The offer price of Rs 120 per equity share represents a premium of approximately 29.5 per cent over the average weekly high-and-low closing price of Indal as quoted on the Bombay Stock Exchange for the 26-week ended March 6, 1998, which was the last full week prior to the publication of the public announcement.

According to Alcan's offer document, the annualised trading turnover is 15,66,328, whereas the total equity shares listed is 7,11,11,982. The total trading volume in the preceding six calendar months is 7,83,164.

Alcan has also applied to the secretariat for industrial assistance (SIA) for obtaining approval for increasing its shareholdingin Indal from the 34.6 per cent to 54.6 per cent by acquiring shares tendered pursuant to the offer.

Alcan has mentioned that it will seek the Reserve Bank of India's approval related to the acquisition of equity shares tendered by the shareholders pursuant to the offer.

Reaffirming its strong commitment to Indal, Alcan has said that once the Indian aluminium major becomes a subsidiary of Alcan, it will be able to improve its access to the technology and resources of one of the largest producers of aluminium of the world.

As Alcan puts it: "The new business structure will provide significant opportunities for Indal to exploit information concerning the latest technologies and market conditions around the world. A direct and immediate result of the integration of Indal into the Alcan group will be its ability to co-ordinate business operations to the benefit of each of Indal, Indal shareholders and Alcan."