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Nadar Forum enters pact to buy 50 pc stake in TMB for Rs 1.1 billion

The five-year-long dispute over control of the private sector Tamilnad Mercantile Bank or TMB was today resolved with the Nadar Mahajana Bank Share Investors' Forum agreeing to buy 50.01 per cent of TMB's shares from the Sterling group for Rs 1.10 billion in nine months' time.

The bank had originally been formed by the Nadars. The sale of 67.29 per cent of its shares to Essar group in 1994 had led to a controversy. The Nadars vowed to ''retrieve'' the shares. The loss of control of the shares, which were eventually sold to the Sterling group by Essar, became a hot issue in the 1998 elections in Tirumelveli. The ruling Dravida Munnetra Kazhagam candidate, actor Sharath Kumar, lost the election.

Today's accord was signed by forum chairman B Ramachandra Adityan and Subramaniam representing the Sterling group promoted by C Sivasankaran in the presence of editor of Tamil weekly ''Thuglaq'' Cho S Ramaswamy and Swadeshi Jagran Manch convenor S Gurumurthy, who had played a key role in the negotiations.

Adityan said the forum would pay the Sterling group Rs 200 million within the next two days and raise the rest of the amount well before the specified period, following which the share transfer would be effected.

The forum also had the option of buying the remaining TMB shares with the Sterling group, amounting to 17.28 per cent, for Rs 450 million. Otherwise, these shares would be sold to various financial institutions, he added.

Replying to a question, Cho Ramaswamy said the accord would lapse if the forum failed to mobilise the required amount within nine months. "I am confident that the forum would succeed in its mission," he added.

He said Sivasankaran had come to appreciate that the TMB issue was an emotional one for the Nadar community. Adityan also showed sagacity and understanding during the negotiations.

Ramaswamy said TMB had accumulated reserves of Rs 1.89 billion which was 66.5 times its capital. The bank's performance had been consistently good and the financial institutions would certainly evince interest in buying its shares, he added.

Replying to a question, Adityan said all pending cases over the issue would be withdrawn. The forum had already collected around Rs 500 million from its members.

The bank management would be restructured after the buyback of shares, he said.

Among those present during the signing of the agreement were Sharath Kumar and former assembly speaker and the All India Anna Dravida Munnethra Kazhagam leader P H Pandyan.

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