Mumbai, June 18: The Birlas-controlled automobile flagship Hindustan Motors has proposed an innovative option for its crucial rights issue, giving its shareholders a choice to subscribe to equity shares or opt for fully-convertible bonds instead on a rights basis. The draft-offer document submitted by merchant banker I-Sec to the Securities & Exchange Board of India (Sebi), which details the option, has deliberately left a Rs 46-crore gap in the break-up of means of financing the aggregate project cost of Rs 503 crore, saying that this will be bridged "through appropriate arrangements as and when necessary."The draft prospectus for the Rs 53.7-crore rights issue, filed with Sebi clearly states that the company would offer an unprecedented choice to its shareholders who can either subscribe to the 53,74,300 fully- convertible debentures (FCDs) on offer, or take up rights shares in the ratio of one share of Rs 10 each for every two shares held, for which the company has proposed the issue of 5,37,43,300 newshares. Shareholders who opt for the FCDs, on the other hand, will be offered one debenture of Rs 100 for every 20 shares held in the company. The proposed FCDs will carry an interest of 16 per cent and will be convertible into equity shares after a period of 17 months and 15 days. The rights plan, designed by I-Sec, however, is categorical that the shareholders can only opt for either of the two options on offer.
Even as Hindustan Motors is in the final stages of coming out with its rights issue, the auto major is yet to tie up funds worth Rs 46.26 crore for its Rs 503.22-crore expansion project. "Appropriate arrangements will be made as and when the funds are necessary," the draft prospectus states.
Hindustan Motors has also slipped slightly on time in implementing its project for the manufacturing of the rural-transport vehicle (RTV) at Pithampur. There has been a two-month delay in the implementation schedule, as compared to the ICICI estimates.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
