RIL Property announces Rs.800mn rights issue to settle bank borrowings
RIL Property PLC this week announced plans to issue fresh shares to its existing shareholders to raise money in a bid to settle part of its bank borrowings that weigh on group profits.
In a stock exchange filing, the property developer, which has interests in food and automobiles, said it will issue 200 million ordinary voting shares in the proportion of one new ordinary share for every three shares held at an issue price of Rs.8.00.
At Monday’s market close, RIL Property’s share ended 60 cents higher at Rs.7.80. This makes the right issue price higher than the trading price of the stock.
Theoretically, for a right issue to become attractive the issue price must be lower than the current trading price of the stock but in RIL Property’s case, since the majority stake is held by a family, this notion is less relevant.