InvestorQ : What is the Aditya Birla Fashion rights issue aimed at?
manisha Kolvenkar made post

What is the Aditya Birla Fashion rights issue aimed at?

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Mahima Roy answered.
4 months ago

The subscription to the Aditya Birla Fashion rights issue will open next week. The company has fixed the record date for rights issue as July 1 and all shareholders whose names appear on the book on that day will get right shares. So 30 June will be the ex-rights day. The issue will open for subscription on July 8 and will close for subscription on July 22.

The rights issue price has been set at Rs.110 per right which is a discount of nearly 15% to the current market price of the stock. The face value of one fully-paid share is Rs. 10 and the balance is accounted for by a premium of Rs.100. The investor has to pay 50% of the issue price or Rs.55/- at the time of application to the rights issue.

In a way, this rights issue has also been modelled on the line of the RIL rights issue. Once the application money is paid, the next 25% or Rs.27.50 will be payable in January 2021. The last tranche of 25% or Rs.27.50 will be finally payable in July 2021. A total of 9.047 crore rights shares will be issued and the rights entitlement will be in the ratio of 9:77.

The company is looking at the rights issue to enhance the resource position of the company as the recent correction in price will also give them a low cost method of raising funds. This is more so as debt funds are hard to come by and most companies are looking to deleverage at this point of time instead of getting caught in solvency risks.