Telco to decide on rights issue at Aug 13 meeting

Our Corporate Bureau

Mumbai, Aug 10: Tata Engineering (Telco) would take a decision on its much-delayed rights issue on August 13. The company has informed the Bombay Stock Exchange (BSE) that it would be deciding on revising and finalising the terms of the rights issue of convertible debentures and non-convertible debentures with warrants attached in the meeting.

Tata Engineering senior vice-president Praveen Kadle said, “We will look at the options including revising or maintaining the issue size and other terms.”

Analysts point out that the rights issue has been delayed due to the depressed market conditions.

Telco, when announcing the issue in February, had said that the company would raise approximately Rs 1,228 crore — Rs 1,382 crore from the proposed rights issue, depending upon the price finally decided by a committee of directors as well as the extent of conversion of warrants by the investors in 2003 and 2004.

The proposed issue would result in the dilution of the existing equity capital of the company by only 20 per cent at the time of conversion of the CDs and up to a further 10 per cent in the event that all warrants are exercised by March 31, 2004.

The proposed issue, subject to the necessary regulatory approvals/ process, was slated to open in the first quarter of the financial year 2001-02.

The board had approved the simultaneous issue of convertible debentures and non-convertible debentures with detachable warrants on a rights basis in the ratio of one convertible debentures and one non-convertible debentures for every five shares (1:5) of the company held.

The company had said that it was for essential capital expenditure and new product development programmes and repayment/ prepayment of expensive borrowings of the company.

The infusion of long-term funds, by way of this rights issue, would also improve the cash flows and the debt equity ratio.