The board has also approved the proposal to break up the face value of ACC shares to Rs 10 a share from Rs 100 a share. The twin-issues will increase ACC's equity base by 31 per cent in two stages: a rights issue will result in a 25 per cent increase in capital, while the preferential allotment of warrants upon conversion will expand the base further to Rs 181 crore.

The rights offering, under which shareholders will be offered one equity share for every four held, will carry a premium of Rs 45 a share. The offer price, fixed at Rs 55 a share for a Rs 10 share, represents a discount of around 35 per cent to the prevailing market price. On the current face-value of Rs 100 a share, the equivalent issue price works out to Rs550 a share.

The ACC scrip closed at Rs 862.50 at the Bombay Stock Exchange on Tuesday. The rights issue will hike the company's capital base by 25 per cent to Rs 171.96 crore from the current Rs 137.57 crore, and would provide funds of Rs 189 crore to the company.

The preferential allotment to the promoters, which include Tata Sons, Tata Tea and Tata Chemicals along with subsidiaries, will be on an ex-rights basis and involve the issue of 90 lakh warrants and/or equity shares at Rs 110 a share. The Tata group currently holds 13 per cent in ACC, which is slated to go up to close to 20 per cent upon conversion of the warrants.

"This preferential issue will be made in accordance with Sebi guidelines in this regard and will be structured so as to enable the Tata group to increase its shareholding in ACC to around 20 per cent when the warrants/equity shares are exercised/issued," the company said in a release. On the current face-value of Rs 100 a share, the equivalent issue price for the preferentialallotment works out to Rs 1,100 a share.

"These figures would need to be adjusted appropriately for the sub-division of shares and also if the warrants/equity shares are exercised/allotted on an ex-rights basis, but without affecting the ultimate percentage holding of the Tatas and the total amount of funds involved," the company said.

Upon exercise/allotment of the warrants/shares, ACC will receive an additional Rs 100 crore, and the equity base will increase only by around 6 per cent to Rs 181 crore.