Wadias to hike Bombay Dyeing stake by 5 per cent
11 Feb 2010
The promoters of Bombay Dyeing have decided to subscribe to convertible warrants, which on conversion would increase their shareholding by 5 per cent over the next two financial years. The Wadias, the promoters, hold a 47 per cent stake in the textile company that also owns vast tracts of land in Mumbai.
The company said its board had decided to issue nearly 4 million warrants to the promoters, of which nearly half would be converted into an equal number of equity shares by 31 March 2011, whereas the remaining half would be eligible for conversion after 1 April 2011, the company said in a stock exchange filing. The relevant date for determination of the issue price would be 21 February and, according to the SEBI formula, the warrants would be priced at the higher of the six months' average and two weeks' average price of the stock, prior to the relevant date.
At the current market rate, the warrants would attract a total investment of Rs200 crore, of which the promoters would not be required to put in the entire amount in one go. Under the norms, promoters are supposed to pay 25 per cent upfront margin at the time of subscription with the balance on conversion of warrants.
The Bombay Dyeing stock lost 1.93 per cent to close at Rs518.90 in a weak Mumbai market.
The company is looking to raise money to retire debt and develop real estate.
The company had a total debt of Rs1,700 crore as of 31 March 2009 and in a separate stock exchange filing the company said its CFO Durgesh Mehta would replace joint managing director PV Kuppuswamy who is to retire on 31 March.
Bombay Dyeing is also about to close a property deal with Axis Bank, which plans to construct its new headquarters at its sprawling mill compound. The Wadias own 50 acres in Central Mumbai with the properties under various stages of commercial development.
Following two quarters of losses and a dismal 2008-09, which ended with a loss of Rs192 crore, the company reported a net Rs2.7 crore profit for the quarter ended 31 December 2009.
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