Suzlon Energy shares fell 7% to Rs. 7.10 after the company’s rights issue to fund Rs.1,200 crore opened for sale on Tuesday. Suzlon Energy rights entitlement (RE) shares or partially paid shares also fell 30.19% at Rs.1.85 against the rights offer price of Rs. 2.50 on the NSE. While the rights issuance concludes on October 20, trading on partially paid shares concludes on October 14.
The company is offering 240 crore rights shares at a price of Rs.5 per equity share. A bidder must pay Rs.2.5 per share at the time of application and another Rs.2.5 per share on the next call. On the record date of October 4, the issue will be in the ratio of 5 rights equity shares for every 21 fully paidup equity shares. The rights issue allotment is scheduled for October 31.
Suzlon intends to repay the State-run REC 1,000 crore from the profits of the rights issuance. Only 800 crore of the 2,800 crores 20year REC credit is for working capital and is priced at 19%. Suzlon’s promoters, the Tanti family, reconfirmed their involvement in the proposed rights offer last Monday. This followed the death of CMD Tulsi Tanti on October 1 due to a heart arrest. The promoter group, which includes the Tantis, now owns 14.5% of the company after lenders converted a portion of their loans into equity as part of a debt restructuring plan.
In a regulatory filing, Suzlon Energy stated, “In continuation to the statement dated October 2, the promoters and the promoter group have reconfirmed their participation in the proposed rights issue and have announced their desire to subscribe to the full extent of their rights entitlement.”