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THE market downturn has taken its toll on another primary stock offering. Tata Investment Corporation (TIC)'s rights issue has devolved on the promoters, with most public shareholders staying away from the offer. This is the second instance of a rights issue devolvement within a week. The rights issue of Hindalco, the Aditya Birla group flagship, devolved on the promoters and the underwriting banks last week.
Sources close to the Tata Investment offer said that no major non-promoter shareholder has opted for the issue, which closed on Thursday. The devolvement could be around 30-35%, but the exact number will be known in one or two days. The non-promoter shareholding in the company is around 40%. The promoters would pick up the entire unsubscribed portion, according to a company source.
According to market circles, the general sentiment has become so bearish that shareholders do not want to commit on the future stock price, a crucial factor for deciding on a convertible issue. The company launched the rights issue of 6.89 million zero coupon convertible bonds, with detachable warrants having a face value of Rs 650 at par.
The bonds are compulsorily and automatically convertible into two parts. Part A is convertible into one equity share at Rs 300 apiece on August 1, 2009 and Part B involves one share at Rs 350 apiece within 18 months of the allotment date. The warrants can be exercised in 2011 at a price of Rs 400. The shareholders of TIC are entitled to buy one bond for every five shares held by them.
TIC had floated the rights issue to raise Rs 723 crore for investing in securities of companies and units of mutual funds and venture capital funds. The compulsory conversion was expected to raise Rs 448 crore and the detachable warrants, if fully converted, would raise Rs 275 crore. JM Financial was the lead manager to the issue. The stock of TIC has fallen by nearly 16% from the record date of September 17. It slipped 0.63% to close at Rs 322.05 at the BSE on Thursday.
kausik.datta@timesgroup.com
Sources close to the Tata Investment offer said that no major non-promoter shareholder has opted for the issue, which closed on Thursday. The devolvement could be around 30-35%, but the exact number will be known in one or two days. The non-promoter shareholding in the company is around 40%. The promoters would pick up the entire unsubscribed portion, according to a company source.
According to market circles, the general sentiment has become so bearish that shareholders do not want to commit on the future stock price, a crucial factor for deciding on a convertible issue. The company launched the rights issue of 6.89 million zero coupon convertible bonds, with detachable warrants having a face value of Rs 650 at par.
The bonds are compulsorily and automatically convertible into two parts. Part A is convertible into one equity share at Rs 300 apiece on August 1, 2009 and Part B involves one share at Rs 350 apiece within 18 months of the allotment date. The warrants can be exercised in 2011 at a price of Rs 400. The shareholders of TIC are entitled to buy one bond for every five shares held by them.
TIC had floated the rights issue to raise Rs 723 crore for investing in securities of companies and units of mutual funds and venture capital funds. The compulsory conversion was expected to raise Rs 448 crore and the detachable warrants, if fully converted, would raise Rs 275 crore. JM Financial was the lead manager to the issue. The stock of TIC has fallen by nearly 16% from the record date of September 17. It slipped 0.63% to close at Rs 322.05 at the BSE on Thursday.
kausik.datta@timesgroup.com
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