Preferential Issue Revised to Non-Cash, Only for Liability Discharge
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Harish Textile Engineers has revised its proposed preferential issue to be entirely against non-cash consideration, effectively a debt-to-equity swap with creditors. Share count reduced from 21,23,800 to 10,60,800 shares at Rs.64, aggregating Rs.6.79 crore. No cash inflow to the company. Proceeds will now only discharge liabilities: short-term borrowings fall by Rs.3.55 crore and sundry creditors by Rs.3.24 crore. Earlier objects of working capital augmentation and general corporate purposes have been removed.
No fresh cash for the company; equity dilutes but liabilities drop, improving debt-equity ratio; no direct cash benefit to shareholders.