Pantaloon Retail (PRIL) has announced that it has decided to allot equity and warrants to its promoters and other investors to raise a total of Rs371 crore.
The PRIL Board has approved preferential allotment of 11mn equity shares to raise Rs201.3cr, issuance of 5mn warrants aggregating to Rs91.5 crore to promoters and 4.1mn shares amounting to Rs75 crore to Dharmyug Investments.
All the issues of equity and warrants are priced at Rs183 per share.
The PRIL Board has also decided to change the name of the company to Future Markets and Consumer Group (FMCG).
Post-restructuring, FMCG, which will be responsible for Private Label business of PRIL, will be the holding firm for current subsidiaries as well as new subsidiaries that will house spun off retail business and fashion segment.
PRIL is looking to raise funds through private equity route via a stake sale in newly formed subsidiaries.
The company has convened an EGM on 12 May to seek the shareholder’s approval for the preferential issue of equity and warrants, while it will place other resolutions of transferring divisions and changing name of the firm through a postal ballot.
We believe that the current restructuring exercise by PRIL will be beneficial for it as it would unlock value in its various business divisions, help raise funds for further expansion and ease off rising debt.
At Rs185, PRIL is trading at 14.9x FY2010E EPS and 2.1x FY2010E P/BV. We remain positive on the company and maintain a BUY on the stock.