The rights issue of Suzlon Energy opened on Tuesday with the company eyeing a total of Rs 1,200 crore by issuing 240 crore equity shares at Rs 5 per share.
Going by the current market price of the share of the company – Rs 7.36 – the rights issue is being made at a discount to the market price with the rights ratio fixed at 5:21, which means, shareholders will get five equity shares for every 21 shares held as on the record rate, which was October 4.
The company is planning to use the issue proceeds to reduce its debt burden, which was pegged at Rs 3,200 crore as on June 30, 2022, said Himanshu Mody, Group Chief Financial Officer, Suzlon Energy while addressing the media.
Also Read | Is Suzlon coming back on track? Top executive shared insight hours before Tulsi Tanti’s demise
While the company – assuming full subscription — has earmarked a total of Rs 900 crore from the rights issue proceeds towards debt repayment or pre-payment, it will not be able to do so at one go as the payment for rights share has been divided into two tranches – Rs 2.50 at the time of application and the balance Rs 2.50 on subsequent call.
Assuming full subscription, the company will be able to repay or prepay debt worth Rs 583.50 crore based on the application money and the balance Rs 316.50 when the subsequent call money pours in.
The balance Rs 283.50 crore of the rights issue proceeds or around 24 per cent of the net proceeds has been earmarked for general corporate purposes.
Also Read | Suzlon’s Tulsi Tanti was an ardent champion of wind energy sector, always leading from the front
The objects of the rights issue include reducing our debt and increasing access to growth capital, said Vinod Tanti, chairman and managing director, Suzlon Energy, while addressing the media.
Inga Ventures is the sole merchant banker managing the rights issue.
The rights issue will close for subscription on October 20.