Warrants issued to up promoter stake in co by 6%: Subex

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The promoters of, IT software products manufacturer, Subex Limted  have decided to pump in money into the company at a fairly significant premium to the current market price. The company board has approved issue of up to 6 million shares to promoters at Rs 80 per share.

In an interview with CNBC-TV18, Subash Menon, Founder Chairman, MD & CEO of Subex, spoke about the company's plans going forward.

Below is a verbatim transcript of the interview. Also watch the video.

Q: Why do you need to infuse capital into Subex now?

A: We had a recent restructuring of Foreign Currency Convertible Bonds (FCCB). Once those FCCB gets converted into shares my stake in the company will come down quite significantly. This is a move by me to shore up my stake in the company.

Q: How much does it keep your stake at?

A: It depends upon the final quantum. We are looking at almost 6 million shares and on a fully diluted basis that will get me an additional 6% almost.

Q: What happens to alleviating the debt while you are maintaining your own stake what is the plan with scaling down the debt for the company?

A: At this point in time after the restructuring the second round of FCCB, bond two as we call them. We did not view that as debt because that would get converted in due course. Then we only have some amount of bank debt and stuffs like that, we will use some of this money to pare down that anyway.

Q: It's happening at a 30% plus premium to the current market price. Is that according to some formula or average price or you chose to do it at a premium?

A: I will go back to the FCCB restructuring and bond holders were given a conversion price of Rs 80.31 so that happened just about two-three months ago. So my view is that in keeping with corporate governance practice that we have and being fair to those bond holders who are getting at Rs 80.31, I felt as a promoter I shouldn't get a benefit over them and hence priced at Rs 80. It's not based on any calculation other than this approach to being fair to the bond holders.

Q: But aside from shoring up of promoter stake, no plan to raise money via any medium in order to scale down your debt levels aside from your bond plan?

A: We do not have any plans because that's now required and given the fact that the company has completely turned around, we expect that over the next couple of years our internal cash accrual will be adequate to take care of any pairing down of loans.