Helios’s vMoksha buyout goes dreadfully wrong

vMoksha wants shares back from escrow a/c; Helios alleges vMoksha chief spreading lies

MUMBAI: It’s a story of an acquisition deal gone horribly wrong and now both, the acquirer and the target are locked in a bitter court battle.

With the arbitration order of court expected anytime now, the stakes between Helios & Matheson and vMoksha Technologies are getting higher.

On Monday, the public relation agency of Helios & Matheson sent a report quoting local Chennai press that Rajiv Shawney, chairman, vMoksha was detained at Bangalore airport after a manhunt, in an attempt to flee the country.

To understand the full story, let’s step back in time.

The roots of bitterness between the two companies date back to April 2005, when Chennai-based Helios & Matheson said it was acquiring vMoksha for $19 million.

After that, the transaction ran into rough weather with Helios claiming Sawhney was against the completion of the deal and vMoksha alleging that Helios had borrowed money from vMoksha’s overseas subsidiary without its knowledge to pay for the acquisition!

Both are now locked in legal battle with the disputed shares of vMoksha in an escrow account.

Helios has alleged that Shawney, an NRI, has spread lies using internet and hence has referred the case to cyber cell of Chennai police.

When DNA Money got in touch with Shawney in his office in Bangalore, he claimed that he was never detained and cops from Chennai Police merely inspected his office computers.

He claimed that he was free to travel, though M Sudhakar, assistant commissioner of police, cyber crime, Chennai police, told DNA Money that till the completion of investigations, Shawney cannot travel.

In its complaint with Chennai police, Helios & Matheson has said that an anonymous person was spreading malicious information about it on the internet.

Citing vernacular news, it said senior police officials from Chennai police have traced the evidence to Shawney, who with the help of his friend Rajeev Shailender was involved in tampering with government documents and the Reserve Bank of India report to show Helios & Matheson in bad light and was found to be posting the fabricated and malicious information on the internet.

Shawney denied all accusations and claimed that it was he who was cheated by Helios. He claimed Helios stock fell 60% in a day in early 2006 when the company was allegedly questioned by enforcement directorate on Foreign Exchange Regulation Act violation.

“In connivance with their bankers in Mauritius, they took a loan of $14.5 million without our knowledge from our subsidiary vMoksha Mauritius, remitted it to Chennai and paid us for the acquisition. They took money from us to pay us!,” Shawney alleged.

Helios management wasn’t available for comments but their lawyer Ravi Kumar said, “After the purchase (of vMoksha by Helios), Sawhney made additional demands, which was not feasible. He then spread lies about the financial health of the company (Helios), resulting in value of the shares going down. Acting on our complaint, the cyber cell of Chennai police is conducting investigations,”

Sudhakar said the police is in procession of some evidence against Shawney, but has not effected any arrest or detained him.

Shawney claimed that Sudhakar was a relative of Helios management and this was the company’s way of putting pressure on him to agree on a settlement since they fear that the arbitration court’s judgment might go against them. “They have put in a case that I have put messages on public domains like www.moneycontrol.com, resulting on their stock prices going down.”

Shawney said he wants the acquisition to be nullified and wants his shares back from the escrow account.

With both parties eagerly eyeing the arbitration court’s final order expected soon, dust on this case would settle only after that.

g_rabin@dnaindia.net