Simbhaoli Sugars suspense cleared, BSE Code - 539742
Warrants at Rs 32.10 to Promoters
· Total 50 lakh warrants to be issued
· Each warrant converts into 1 equity share
· Promoters investing Rs 16.05 Cr through the issue
At last clarity emerged. The new promoter group of Simbhaoli Sugars Ltd (BSE Code: 539742) have ended the buzz that at what price they would subscribe to the shares or other securities to be issued to them on preferential basis. Today’s meeting of Board of Directors (on 22 August 2017) decided that 50 lakh preferential warrants would be issued to the promoters. Each fully convertible warrant of Rs 10 should be converted into one equity share of Rs 10 (FV) each. The issue price is fixed at Rs 32.10. In this way, the promoters will be bringing in Rs 16.05 crore as their contribution as per the understanding arrived between the company and the lenders group.
Today’s Board decision was announced after the market closing hours. As per this, the premium being paid by promoters is Rs 22.10 (Issue Price minus Face Value). What disappointed the investors most is the valuation that was given. Since the Book Value of share is above Rs 80, market expecting promoters will pay at least Rs 55 per share, though suspicion is there considering the movement of the share price for a long time between Rs 30 - 35. Only recently it creeped to around Rs 40 for brief period and then again shown weakness.
One Mr Gurmit Singh Mann (promoter group), and Ms. Gursimran Kaur Mann, MD of the company, are investing in the fully convertible warrants. After the rival promoter group exited from promoter group to public shareholders category, the other group has taken away the management into their hands recently. In that process Gursimran Kaur occupied the Managing Director seat. As the investor readers of this column knew well of the potential and prospects of the company. It is probably the only sugar company stock trading below the Book Value while so many penny sugar stocks are quoting at unreasonably high prices. Anyway, now that all uncertainties are cleared, investors are hoping the real value would be reflected once the preferential warrants issued to the promoters.