V Vaidyanathan, vice chairman and managing director of Future Capital Holdings, and Kishore Biyani, promoter and chairman, have decided not to convert 10 million warrants issued to them by the company in September 2010.
Of this, two million warrants were allotted to Vaidyanathan at Rs 237 a piece, as part of his joining bonus in Future Capital in 2010. On conversion, the warrants were worth Rs 47.40 crore.
At Rs 120.70, the current share price of Future Capital has rendered it unattractive for them to convert the warrants into shares, said analysts tracking the company. It could not be ascertained as to what Vaidyanathan would get in lieu of the warrants foregone.
Vaidyanathan and Biyani could not be contacted for comments.
According to the deal between Biyani and Vaidyanathan, besides salary and perks, the latter was supposed to get a 10 per cent stake in the company. The warrants accounted for 2.5 per cent of the total 10 per cent offered to Vaidyanathan, who joined Future Capital after his stint with ICICI Prudential Life Insurance.
| NOT QUITE A BOOTY Companies whose promoters allowed warrants to lapse | |
| Companies | Promoters |
| Pantaloon Retail | Kishore Biyani, others |
| Hindalco | Aditya Birla Group |
| Tata Power | Tatas |
| GE Shipping | Sheth family |
| Indiabulls Real Estate | Indiabulls group |
| Reliance Infrastructure | Reliance ADA group |
| JSW Steel | JSW group |
According to data available with stock exchanges, the promoters have already transferred stake worth 2.12 per cent to Vaidyanathan.
The company had allotted warrants to Biyani and Vaidyanathan on September 30, 2010 and March 29, 2012 was the last date for conversion of the warrants into equity shares.
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“The warrant holders have not exercised their right to convert their warrants into equity shares by the latest date of exercise of the right, which was March 29. Therefore, the aforesaid warrants allotted in their favour shall now stand lapsed,” Future Capital said in a statement to the stock exchanges.
Though the stock has lost 53 per cent since the warrants had been issued, sources said this was primarily due to the decline in market conditions and the macro economy.
The fall in the stock markets has led to many promoters allowing warrants allotted to them to lapse. In December, the promoters of Pantaloon Retail had decided not to convert into equity the 10 million preferential warrants issued to them and forfeited the Rs 100-crore deposit money.