Allotment of equity shares against conversion of warrants
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Vishal Fabrics Ltd has allotted 75 lakh equity shares (face value Rs. 5 each) to North Star Opportunities Fund VCC-Bull Value Incorporated VCC Sub-Fund on conversion of an equal number of warrants. The warrants were originally issued on a preferential basis at Rs. 30.60 per share, and the allottee has now paid the remaining 75% (Rs. 22.95 per warrant), bringing in Rs. 17.21 crore to the company. Post this allotment, the allottee holds 3.33% equity in the company. The company's paid-up capital has risen to Rs. 112.56 crore, comprising 22.51 crore equity shares. Additionally, 2.25 crore warrants remain outstanding for conversion within the 18-month window.
This is a non-dilutive event for existing shareholders in the sense that dilution was already priced in when the warrants were issued; however, the company's share base has now expanded, slightly diluting existing shareholders. The Rs. 17.21 crore inflow strengthens the company's cash position for business needs.