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Tuesday, 7 June 2011 00:38 - - {{hitsCtrl.values.hits}}
Alufab Plc yesterday announced plans to go for a Rs. 305.4 million Rights Issue and convert Rs. 87 million of debt in to equity, thereby strengthening the balance sheet to improve the business.
At the meeting of the Board of Directors of Alufab on Friday, it was resolved that to correct the negative stated capital of the company and to provide working capital to expand operations, a Rights Issue of two new shares for every one held at Rs. 38 per share would be proposed to shareholders. The move aims to raise Rs. 305.47 million.
At present Alufab suffers from a negative capital of Rs. 48.3 million on account of accumulated losses of Rs. 104.7 million as against paid up capital of Rs. 40.19 million and revaluation reserves of Rs. 15.2 million.
The Board also resolved that to take advantage of the present economic progress in the country and to expand operations, the company will restructure the balance sheet by way of a conversion of existing debt to the directors and connected parties. The debt conversion will be done immediately after the Rights Issue. The modus will a private placement at Rs. 38 per share.
Total debt component to be converted to equity is Rs. 87.02 million and shares to be issued are 2.29 million.
Debt includes advances against capital issues worth Rs. 31.65 million held by P.J. Claesson and Rs. 7.69 million to Metro Incentives Inc.
Loans to the company worth Rs. 15.49 million given by Claesson, Rs. 21.4 million by Fastighets AB Premia (connected party) and Rs. 10.77 million by Director T.N. Dole will be converted to equity as well.
The new moves are subject to shareholder and regulatory approval.
The market welcomed the moves as Alufab shares yesterday touched an intra-day high of Rs. 138 before closing at Rs. 124, up by Rs. 25.90 from Friday. Last week the share dipped by Rs. 9.
