Intimation of In-principle approval received for issue of 2,51,39,620 Equity Shares
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Radhe Developers India Ltd has received in-principle approval from BSE for issuing 2,51,39,620 equity shares (face value Rs. 1) to the promoter on a preferential basis. The shares will be issued at a price not less than Rs. 2.55 per share, against the conversion of an unsecured loan of Rs. 6.41 crore. The allotment is being done under Chapter V of SEBI's ICDR Regulations, 2018. This effectively converts promoter debt into equity, strengthening the company's balance sheet by replacing a liability with equity capital. BSE has advised the company to obtain undertakings from the allottee to avoid any non-compliance related to trading restrictions.
The loan-to-equity conversion reduces the company's debt burden and strengthens its net worth, but it also dilutes existing shareholders since a large number of shares are being issued to the promoter at a price below typical market levels. Shareholders should expect some dilution and monitor how the company utilizes the cleaner balance sheet going forward.