Shareholders of Arvind Mills has approved the firm's proposal to come out with a rights issue of equity shares worth Rs 75.41 crore as well as the issue of warrants to lenders. The resolutions were passed at an extra-ordinary general meeting held in Ahmedabad today.
Company chief financial officer Jayesh Shah said the shareholders' nod was unanimous thus giving the go-ahead to the restructuring exercise being implemented by the company.
The proposed rights issue of equity shares of Rs 10 face value would be at par with Rs 5 to be paid on application and balance Rs 5 on allotment. The shares would be issued in the ratio of three shares for every four held.
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Shah said the offer documents would be filed with the Securities and Exchange Board of India (Sebi) within a week and the issue was likely to open for subscription in the first fortnight of September.
The issue of warrants envisages allotment of warrants (to lenders of the company) aggregating not more than 4.03 crore in numbers, entitling them to an option to convert such warrants into equity shares of Rs 10 each in the ratio of one equity share against one warrant.
According to Shah, Arvind Mills would also issue secured optionally partially convertible debentures of Rs 500 each at par aggregating Rs 50 crore with warrants attached.
Each debentures would be comprised of part A of Rs 100 each, which would be detachable and optionally convertible. Part B of Rs 400 each would be non-convertible and part C would consist of five detachable warrants.
As far as part A is concerned, the optionally convertible debenture (OCD) holder would have an option to convert the debentures into equity shares of the company at a price of Rs 15 per equity share. Under part B comprising of non-convertible debentures (NCDs) of Rs 400 each, interest would be paid on the NCDs at the rate of 13 per cent per annum subject to the deduction of income tax.
As far as the five detachable warrants under Part C are concerned, they shall entitle the holder to subscribe for one equity share of Rs 10 against each warrant held. The exercise price under the warrant shall be Rs 15 per equity share. An amount equivalent to at least 10 per cent of the exercise price, i.e. Rs 1.50 per warrant, shall be payable on the date of allotment of the debentures.
The shareholders at the EGM also approved the increase of authorised share capital of Arvind Mills from Rs 260 crore to Rs 320 crore and the alteration of the memorandum of association to this effect.