Bharati Shipyard withdraws preferential allotment of warrants

MUMBAI: Tight liquidity position of its promoters has prompted Bharati Shipyard to withdraw the proposed allotment of convertible warrants to them.

The company had proposed the preferential allotment of 15,52,700 shares at a price of Rs 139 per warrant in the meeting held on August 19, 2011, which was subsequently approved at the annual general meeting of its shareholders held on September 22, 2011.

Since then, the share price has fallen substantially because of which the premium of the conversion price over the market price has gone up.

"The company will not proceed with the preferential allotment of convertible warrants to the promoters due to delay and financial stress" said Bharati Shipyard in a communication to the BSE. From Rs 103.5 on September 21, 2011, the stock has fallen 21% to close at Rs 81.60 on the BSE on Wednesday.

At the current price, the shares are quoting at a discount of 41% over the conversion price of the proposed warrants. The stock was trading 2.6% up at Rs 83.8 intra-day on Thursday. The Bharati Shipyard promoters hiked their stake from 44.5% to 46.9% in the July-September quarter.

But, the stakes of foreign and domestic institutional investors declined as they owned 1.4% and 10.7% equity, respectively, compared with 2.3% and 11.10% at June-end, according to shareholding data filed with the BSE.