India’s largest listed retail company, Future Retail Ltd, has said it will raise up to ₹2,000 crore to pare debt and fund expansion.
According to a stock exchange filing, the company will raise the money through a combination of preferential issues of shares and warrants and a rights issue.
About 75 per cent of the money raised would be used for retiring debt, which stood at ₹4,000 crore as on March 31, 2014.
Future Retail, which now owns and operates hypermarkets and supermarkets under Big Bazaar, Food Bazaar, eZone and Foodhall brands across 95 cities in the country, has already sought the board approval for the preferential issue.
Funds up to ₹400 crore would be raised through an issue of preferential shares and warrants and ₹1,600 crore through rights issue, the retailer said.
The Board has approved the issue of 1,53,84,615 equity shares of ₹2 each at a price of ₹130 a share aggregating to ₹199.99 crore on the preferential basis to “brand equity treaties”. The company proposes to raise ₹99.99 crore through an issue of warrants (common shares) and another ₹100 crore through an issue of warrants with differential voting rights.
The company will be holding an extraordinary general meeting on July 9, for obtaining shareholders’ approval for the issues . Formerly known as Pantaloon Retail, the company’s founder and promoter Kishore Biyani demerged its fashion business (Pantaloon) and sold it to Kumar Mangalam Birla’s Aditya Birla Nuvo (ABN) in 2012 after being burdened with mounting losses and debt.
Biyani's Future Group, on a consolidated basis, had a debt of around ₹7,800 crore as on December 2011. The deal with ABN helped Biyani bring down the debt by ₹1,600 crore.
Meanwhile, Future Retail’s stock reacted negatively to the news. On Wednesday, the company scrip slid 7.22 per cent on BSE to ₹135 on equity dilution worries.