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Nandan Denim Ltd on Monday announced issuance of 25 lakh fully convertible warrants to a UK-based foreign institutional investor, Polus Global Fund, for a total consideration of Rs 50 crore.
The warrants will be converted into equity shares at Rs 200 per share within 18 months. The conversion price of Rs 200 per share is at over 70 per cent premium to Friday's closing price of Rs 115.50 per share on the BSE and 250 per cent premium to the book value of Rs 57 per share. Total FII holding in the company will go up by 5 per cent.
After the announcement, the company shares surged to hit intra-day high of Rs 133.90 before closing at Rs 131.40 on the Bombay Stock Exchange (BSE), about 13 per cent up from the previous close.
As on June 30, 2015, FII holding in Nandan Denim stood at 3.09 per cent, which has remained stable since December 2014, when the FII holding was 3.82 per cent. The UK-based FII currently holds 1.35 lakh shares or 0.30 per cent stake, which will increase to 26.35 lakh shares or 5.48 per cent post conversion of the warrants into equity shares.
Promoters hold 60.94 per cent shares of the company, while the domestic institutional investors (DIIs) have below 1 per cent holding in the denim major.
"Nandan Denim will seek shareholders’ approval for this preferential allotment at its upcoming Annual General Meeting (AGM) on September 29, 2015," the company informed in a statement on Monday.
Polus Global Fund, registered in the Republic of Mauritius and managed by Fidelis Trust & Corporate Services Ltd, will have to pay an amount equivalent to at least 25 per cent (Rs 12.5 crore) of the consideration on or before the allotment of warrants, while the balance 75 per cent shall be payable on or before the time of exercise of the warrants (i.e. within 18 months), the company said.
The fund, having category 1 global business licence, has made strategic investments in several Indian entities, including Omaxe Ltd, Archies Ltd, ERA Infra Engineering Ltd, Gujarat Apollo Industries Ltd, IDFC Ltd, and Tata Global Beverages Ltd.
Deepak Chiripal, CEO, Nandan Denim Ltd, said, "Company will use the fresh funds for its expansion project. Having attained global scale, we now aim to internalise the ‘global way of doing business’."
Nandan Denim is undertaking capex execution with an outlay of Rs 612 crore for expansion of denim fabric manufacturing capacity, spinning capacity and shirting capacity.
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