Kishore Biyani's Pantaloon Retail India on Wednesday got its shareholders' approval to raise Rs368 crore from the sale of equity and linked warrants to promoters and select investors. The sale will help the promoters raise their stake to 51 per cent from 46.5 per cent.
As part of the plan, the company would issue 11 million equity shares to PFH Entertainment Ltd at Rs183 a share, raising Rs201.3 crore, Pantaloon informed the Bombay Stock Exchange. In the second transaction, about 4.1 million shares will be issued to Dharmyug Investments, an arm of media conglomerate Bennett, Coleman and Company Ltd, at Rs183 a share. This will help raise Rs75.03 crore.
PFH Entertainment Ltd, a company within the promoter group, will be issued five million warrants at Rs183 each, to raise Rs91.5 crore.
The option to acquire equity shares may be exercised by the warrant holder(s) any time in the 18 months after the allotment. The applicant(s) will have to pay 25 per cent of the price of the warrants to the company as a deposit to be adjusted against the price of the equity share payable at the time of exercising the option, the release said. ''The warrants issued and allotted will be transferable within the promoter group and associates subject to board approval,'' it added.
In April this year, the company received permission for restructuring, involving the transfer of the ownership of retail and fashion divisions. Pantaloon Retail (India) Ltd will now be renamed Future Markets and Consumer Group, a new holding company for businesses such as financial services, insurance, logistics, knowledge services and media. It will have a 100 per cent subsidiary called Future Fashion Merchandising Ltd. Analysts say the restructuring has been done to exploit the potential of getting private equity investment at the subsidiary level.
The fund-raising is expected to bring down the debt to equity ratio, which has been steadily rising. The ratio has gone up from 1.17:1 in fiscal year 2007 to 1.21:1 in FY 2008 and is expected to be around 1.4:1 in the current financial year which ends on 30 June 30 (the company follows the June reporting cycle).
The shares of the company surged over 8 per cent on the Bombay Stock Exchange after the news.