New Delhi:
Essar Shipping on Saturday said its shareholders approved the proposal to increase authorised share capital to Rs 650 crore from Rs 500 crore at the annual general meeting held yesterday.
The proposal to increase the authorised share capital of the company Rs 500 crore to Rs 650 crore dividend into 50 crores) equity shares of Rs 10 each and 15 crore preference shares of Rs 10 each of the company was approved by shareholders at the AGM held on December 29, 2017, the company said in BSE filing.
The proposal was to increase in authorised share capital of the company and reclassification of share capital and change in Memorandum of Association and Articles of Association of the Company accordingly so that it can convert its debt into equity.
On 24 August 2010, Essar Shipping Ltd (ESL) had issued Foreign Currency Convertible Bonds (FCCB’s) for USD 240 million carrying interest at the rate of 5 per cent per annum payable semi annually.
The FCCBs are convertible into fully-paid equity shares of Rs 10 each of the Company or Compulsorily Convertible Preference Shares (CCPS), at the option of the FCCB holders at conversion price of Rs 91.70 per share at a predetermined exchange rate of Rs 46.94 per USD.
The ESL had proposed to issue Compulsorily Convertible Preference Shares (CCPS) to the FCCB holders. Issuance of CCPS will reduce current borrowings by Rs 1,537 crores with a resultant increase in the Company?s net worth.
This will also improve the health of the company’s balance sheet by reducing the Company’s leverage. Considering the option of issuing the CCPS, the share capital of the company was required to be increased and re-classified.
