India’s leading utility car manufacturer Mahindra and Mahindra plans to raise Rs 700 crore by issuing fully convertible debentures. The debentures are likely to be issued to Golboot Holding, an entity owned by Goldman Sachs, a global financial service major.
The company will bring the matter to the notice of shareholders and will seek their approval by a postal ballot. The Board of Directors of M&M met on May 2 and decided to contact shareholder through postal ballots. The results of the ballot will be declared on June 11, 2008.
The Mahindra and Mahindra plans to issue 93.95 lakh unsecured fully and compulsorily convertible debentures at the face value of Rs 745 each. Each of these fully convertible debentures will carry an interest rate of 9.25 percent p.a. and can be converted to equity shares within 18 months from the date of allotment of FCDs (fully and compulsorily convertible debentures). The equity share will carry a face value of Rs 10 each and a premium of Rs 735.
The Indian laws make it mandatory for conversion of FCD’s into equity shares after the completion of 18 months, from the date of allotment. According to a company statement, the FCD issue price is at a premium of 7.91 per cent to the closing price of Rs 690.35 traded in BSE on May 2. The money raised through FCDs will be utilized for its auto and tractor business.