Financial Daily from THE HINDU group of publications
Thursday, Sep 19, 2002
Electrolux Kelvinator board okays cut in offer size of rights issue
NEW DELHI, Sept. 18
WILL Electrolux Kelvinator Ltd (EKL), the Indian subsidiary of Swedish white goods major AB Electrolux, be lucky this time? The board of directors of the company has approved the revised rights issue proposal with reduction in offer size to Rs 199.7 crore.
The original proposal envisaged the company coming out with a rights issue of 24,97,18,386 equity shares of Rs 10 each. The company was working out alternative options for its proposed rights issue following the recommendation of the Securities and Exchange Board of India (SEBI) to reject its earlier proposal.
The capital markets regulator whose views were sought by the Foreign Investment Promotion Board (FIPB) had recommended rejection of the proposal since it reckoned that the move could result in the delisting of the company from the bourses.
The parent company, AB Electrolux, controls 75.96 per cent of the company's equity while the Indian promoters hold 9.64 per cent with the balance - 14.40 per cent - being distributed among the public and FIs. The company's application with the FIPB was also deferred as comments from SEBI were sought on this proposal.
EKL's board which met on Tuesday has approved reduction in the offer size of the proposed rights issue of equity shares of the company from Rs 249.7 crore (Rs 2497.20 million) to Rs 199.7 crore (Rs 1997.80 million), in view of the intention of AB Electrolux to make a one time, voluntary, discretionary revenue grant of Rs 50 crore (Rs 500 million). The company will now seek approvals from FIPB.
The board has also approved acceptance of the one time voluntary, discretionary revenue grant of Rs 50 crore (Rs 500 million) from AB Electrolux, Sweden, to the company, to meet part of its significant revenue expenditure and to improve its current liquidity position.
It has also approved a further issue of up to 19,97,74,709 equity shares of Rs 10 each on rights basis to the existing shareholders of the company in the ratio of eight equity shares for every seven equity shares held at par i.e. Rs 10 each to be fully paid, aggregating up to Rs 199,77,47,090.
Further, AB Electrolux, has confirmed its intention to fully subscribe to the revised rights entitlement and any shortfall/portion of the rights issue, which may remain unsubscribed by the other shareholders subject to approvals of SEBI, FIPB and other regulatory authorities as may be required, the company said.
Further, EKL's board has also approved the variation of the right to receive dividend on 10 per cent Cumulative Redeemable Non-Convertible Preference Shares of the company, held by AB Electrolux, in terms of consent received under Section 106 of the Companies Act , 1956, subject to regulatory approvals if any.
Such variations in the terms provide that the dividend on the 10 per cent Cumulative Redeemable Non-Convertible Preference Shares shall be due and payable only on expiry of four years from the date of original allotment i.e. December 16, 2004 or on exercise of put and call option whichever is earlier, the company said.
It also approved the payment of one per cent royalty to Electrolux Home Products Inc effective January 1, 2002 for use of the trademark `Kelvinator' on the products of the company subject to applicable regulatory approvals. The board also accepted the consent of AB Electrolux, the foreign collaborator and promoter, for suspension of payment of five per cent royalty for technical support for process and product development subject to applicable regulatory approvals.
Further, the divestment to Bharat Compressors Ltd of the compressors manufacturing facilities of the company at Sanathnagar (Andhra Pradesh) and Warora (Maharashtra) subject, however, to applicable regulatory approvals including the shareholders approval through postal ballot was also approved.
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