Nandan Denim Limited (NDL) plans to issue 50 lakh convertible warrants on a preferential basis to foreign investors at Rs 200 each, including a premium of Rs 190, according to the company’s official statement.
Nandan Denim Ltd’s CEO Deepak Chiripal said, “The strategic vision of the company is to emerge as a global leader in the textile industry. To fast track this strategic vision, the company requires infusion of additional funds. It will be utilised to augment the net worth and capital base of the company required for its business growth, to fund existing or proposed subsidiaries, to meet long term working capital requirement, to improve its capital structure and general corporate purposes,” Nandan Denim Ltd’s CEO Deepak Chiripal was quoted as saying in the statement.
As per the statement, the company is expected to raise Rs 100 crore from warrants issued, to fund its growth plans, investment in proposed subsidiaries, meet long term working capital requirement as well as improve capital structure.
The company will issue 25 lakh fully convertible warrants each to foreign portfolio investors, LTS Investment Fund Ltd and LGOF Global Opportunities Ltd at Rs 200 each. It has received shareholders’ approval to do so at the Annual General Meeting on September 28, 2016, the statement said.
Presently, LTS Investment Fund Ltd holds 11.64 lakh shares (2.42%) which will increase to 36.64 lakh shares (6.91%) after the issue. Warrant holders will be entitled to convert their warrants into equal number of equity shares of a face value of Rs 10 each, on receipt of entire amount in one or more tranches, within a period of 18 months from the date of the allotment.
The conversion price of Rs 200 per share represents premium of over 57% to current share price of Rs 127.05 per share (as on Tuesday, September 27, 2016).
This will be the second warrant issue by Nandan Denim Ltd after September 2015, when it had issued 25 lakh convertible warrants to foreign institutional investors, namely Polus Global Fund which has been converted in to equity shares at Rs 200 per share upon receipt of Rs 50 crore towards the consideration.
As of June 2016, foreign institution investors and foreign portfolio investors held 11.02% in the company, while the promoter group’s holding is 58.27%.
After issue of the 50 lakh warrants, the holding of foreign institutional investors (FIIs) and foreign portfolio investors (FPIs) will increase to 19.70%, while the promoter’s stake will come down to 52.78%.
Also considering the continuous increase in the holding of FIIs and FPIs, besides various advantages in attracting institutional investors, the company has proposed to increase the aggregate share holding limit by the FIIs and FPIs, from 24% to 49%.
Incidentally, Nandan Denim Ltd posted a net profit of Rs 63.32 crore on net sales of Rs 1156.72 crore during FY 2015-16.