KARACHI: In the latest development in the strange case of Tri-Star Power Ltd, the Sindh High Court has ordered a halt to a Turkish investor’s attempt to orchestrate a hostile takeover of the company. Reportedly, the Turkish investor was trying to acquire around 51% of the power plant’s shares to gain control of the publicly listed electricity producer and industry supplier.
The power producer announced on Monday that the aforementioned court order follows a suit it filed for a permanent injunction against Aykut Calikusu, a high net-worth individual from Turkey with expertise in e-commerce and the sale of locally sourced products in the Gulf. The company alleged that Calikusu was acting “in concert with others”and engaging in share price manipulation, while illegally accumulating shareholding.
What is Tristar
Tri-Star Power Ltd is a power company located in SITE, Karachi. It provides electricity on a rental basis to customers within the same industrial group. The electricity is generated and distributed through a 10-megawatt plant installed on the premises of Image Pakistan Ltd. Considering that Tri-Star Power’s customer base is limited to the same industrial group, it is considered to be a captive power producer.
Tri-Star Ltd is a publicly listed company on PSX and hosts a large number of easily tradable shares, owned by ordinary investors, which is called a “free float”. The original founders of the company hold only 21.6% of the shares. Interestingly, no single shareholder controls more than 10% stake in the company.
It is difficult to determine the exact power production of the plant, since electricity is generated on demand. Prior to 1 July 2021, the company charged customers on a per-unit basis for the electricity they consumed.
What is happening?
There is something strange happening with the share price of Tri-Star Power Ltd. It was announced by Alpha Beta Core Solutions Ltd, which manages the offer, on 9 March 2023, that a Turkish investor named Aykut Çalikuu had expressed interest in buying more than 51% of the shares of Tri-Star Power.
According to analysts, the power sector in Pakistan offers lucrative returns. Getting a cheap company would make any foreign company look forward to investing in Pakistan. If the due diligence process goes well, the foreign company will negotiate a price with the local business, which may or may not match the current market rate on the stock exchange.
Someone involved in the transaction from the marauder’s side alleged that the company’s management was obstructing the takeover attempt by highlighting the violation of regulations.
How did Tri-Star Power Ltd end up under the threat of an aggressive Turkish takeover and how are they stonewalling the process?
According to sources, the potential investor had formally approached the Securities and Exchange Commission of Pakistan (SECP) on 20 March 2023, against the targeted electricity producer for not providing the “relevant and material information” required for due diligence.
In a subsequent correspondence on 4 April 2023, the apex regulator told the Tri-Star Power Ltd to “ensure meticulous compliance” with takeover regulations and provide the potential acquirer with material information for due diligence.
The potential buyer now has been accused of causing the price to skyrocket by a whopping 431% (from Rs 3.60 to Rs 19.12), between July 2022 and February 2023, even though there hadn’t been any significant change in the company’s operations. According to the power company, this reflects the “manipulation by the acquirer either directly or indirectly through the persons acting in concert”.
Since the announcement of the Turkish investor’s intention to acquire a controlling stake in the company, Tri-Star Power Ltd’s share price has experienced a downward spiralling trend.
The closing price of the shares was Rs 16.04 on 8 March 2023. However, following the public announcement of the possible takeover on 9 March 2023, more than 51% of shares and control of the target business, the share price began to plunge. The closing price on 10 March 2023 was recorded to be Rs 13.93, which is a drop of 13% from Rs 2.11, in just two days.
After refusing to issue any official response to the media regarding the situation, Tri-Star Power’s management finally broke their silence on the matter, claiming that the reason behind the initial and sudden increase was due to the Turkish investor’s manipulation of the stock. The company alleged that, “The proposed acquirer is not a shareholder of the target company. He is a Turkish citizen… and does not even have an account with CDC (Central Depository Company),”
They further shared that Calikusu’s illegal antics may have involved secretly buying up shares in violation of regulations. They claim that the acquirer, either directly or indirectly in collaboration with others, had been unlawfully amassing shares of Tri-Star without disclosing it.
It was also alleged that the Turkish acquirer lacks both the means and the net worth to make this transaction and is “merely acting as a frontman on behalf of others in order to bypass the regulations”.
These actions violate the Securities Act 2015 and the regulations set forth by the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations 2017.
This unveils a legal battle between Tri-Star Power Ltd and Aykut Calikusu, showcasing the complications and difficulties associated with mergers and acquisitions in the energy sector. As the court order mandates a maintenance of the status quo, it remains to be seen how the situation will unfold, and whether the Turkish investor will eventually gain control of the power producer.
