BST Ltd, part of BPL Ltd, has received approval from the shareholders to refix issue price for allotment of its equity shares to BS Refrigerators Ltd and BPL Sanyo Finance Ltd following these companies' inability to pay part of the fixed issue price of Rs 49.44 per share.
In another development, BPL Engineering Ltd, part of BPL Group, has decided to forego 10 per cent dividend for financial year 2001 as recommended by the board because of the economic downturn.
The shareholders of BPL Engineering Ltd approved a resolution put forward by the directors at last week's annual general meeting by a simple majority to cancel the proposed 10 per cent dividend "in view of the global recession as well as the gloomy economic scenario, especially after the World Trade Centre tragedy." The 10 per cent dividend amounted to around Rs 2.5 crore.
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In the case of BST Ltd, the issue price of Rs 49.44 per share was fixed in 1994 but the allottees communicated to BST Ltd their inability to pay the balance of issue price citing reasons like lower than expected performance of their companies, tight financial conditions and low market quotations of the companies' shares.
The shareholders approved reduction of the issue price to a price not below Rs 37.08 per equity share by waiving payment of the balance of share premium and or face value in respect of the shares or by extinguishing the unpaid amount on these shares and or in any other manner approved by the board.
According to senior officials of BPL and as per the annual report of the company, the board had allotted 36,15,700 and 9,34,300 equity shares at Rs 49.44 each to BS Refrigerators Ltd and BPL Sanyo Finance Ltd, respectively, comprising a share premium of Rs 39.44 per share.
At present, these shares are paid up to the extent of Rs 37.08 per share, which is 75 per cent of the issue price of which Rs 7.50 is towards the face value and Rs 29.58 towards the share premium.
Apart from the reasons of below-the expectation performance, the allottees of the shares said that the non-declaration of dividend in the last few years has several impacted their cash flows and they have pointed to the current market prices, which are lower than the balance amount payable by them.
The company had in 1994 approved the issue and allotment of equity shares to a few corporates on a preferential basis in accordance with applicable norms governing issue of share.