Moneycontrol Bureau
Board of Future Retail has approved realignment of its retail operations with Bharti Retail, marking another consolidation in the sector. Shares of Future Retail jumped 18 percent intraday on Monday.
"To streamline the operations resulting from this consolidation, the board of directors of Future Retail and Bharti Retail have proposed a demerger of the retail business of Future Retail to Bharti Retail, and a demerger of the infrastructure business of Bharti Retail to Future Retail," a company statement said.
After the demerger, business will be operated through two distinct entities. Post completion of the demerger, the first entity, to be known as Future Retail Limited (proposed), will host the retail operations of both the entities. The second entity, to be known as Future Enterprises Limited (proposed), will host infrastructure, investments and assets of both the companies.
"Consolidation and demerger are subject to approvals of shareholders, High Court of Bombay, the Competition Commission of India, the stock exchanges and other regulatory bodies," the company said.
The mathematics
Future Retail will issue one fully paid-up equity share of Rs 2 each of Bharti Retail. 4,34,78,261 equity shares with face value of Rs 2 each, fully paid up of FRL will be issued on demerger to the equity shareholders on BRL.
The existing holders of optionally convertible debentures (OCDs) of BRL aggregating to Rs 250 crore will hold OCDs in BRL and FRL totally to the same amount. These OCDs will be convertible into equity shares of the respective companies, at the option of the company, at the price prescribed under Sebi (ICDR) regulations, 2009 for preferential issue of securities on date of conversion.
Equity shares of BRL issued to the shareholders of FRL, pursuant to the scheme shall be listed on the stock exchanges.
(Posted by Nasrin Sultana)
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