True. Normally, Any rights documents shall have similar wordings whenever there is promoter participation.
Recently, Sandhur also came similar low priced. its indirectly rewarding shareholders ( including promoters). Now, RE units are tradeable , hence anyone can buy & convert to shares.
Concall Transcript is out and guess what? They’ve used “Company Speaker” in place of the Speakers’ name. All earlier transcripts had the Speakers’ name written against their answers.
I suppose this jugglery is to hide the name of the person behind the unnecessary outburst, which is public by now anyway.
The Management should treat Analysts and Shareholders alike with respect and apologize upfront when they don’t. Mistakes happen; people lose cool once in a while and that’s completely fine. But to try and mask it — as a shareholder, it’s just disappointing they did that.
Correct me if I am wrong, but retail shareholders don’t have any way of buying the unsubscribed portion of the rights or is it possible? The rights which will eventually trade on the exchange will be ones which have already been subscribed for right? The point I am trying to understand “Is there anyway non-promoters can take advantage of non-subscribed portion of the rights issue?”
Thanks a lot!
applying for extra shares is certainly possible.
however, the extra shares allotted will be proportional to the initial shareholding of existing shareholder.
by this criteria, promoters stand to benefit more than anyone else since they are the majority shareholder(s).
I am sorry for appearing to be a noob here, but my understanding is as follows (which is most certainly not fully accurate and please guide me whenever I am erroneous)
1- Warrants are initially allotted to shareholders as per their respective shareholding in the company. For eg: If I own 10 shares, I get 10 rights to subscribe to additionally shares @Rs5 (instead of current market price of 330rs). Assume total outstanding shares as 100 shares and promoters own 50 shares
2- I approach the registrar and I pay Rs 50 (₹5*10 shares) to subscribe to 10 additional shares
3- Now suppose the other 40 shareholders are not active and are not aware of this rights issue. They don’t subscribe to the rights and it goes unexercised. Hence 40 shares are unexercised
4- As per the disclosure, promoters will exercise these 40 shares completely at Rs5 per share instead of Rs 330 (current market price). While I am not diluted, the other inactive shareholders are and promoters increase their shareholding at throwaway price.
5- Is there anyway I can get access to these 40 rights which are unexercised or will the promoters gobble up everything? I understand that rights are issued as per shares owned, but what do I need to do to gobble up these rights and ensure promoters don’t get everything (I am sorry for wording it in that way but this is essentially what the promoters are doing).
6- Basically will these unexercised 40 rights be exercised completely by promoters (who own 50% of company) or will these 40 rights be again offered to shareholders who have exercised their rights and distributed in proportion to their shareholding (ensuring that both the promoters and the active shareholders enjoy the discounted price of the warrants).
Thanks a lot and pardon my ignorance again 
Refer to this.
Thanks Dinesh. From what I understood, every shareholder as of record date gets a rights entitlement credited to his demat account. Now the shareholder can chose to subscribe to those entitlements by paying cash or let it expire. He/ she can also buy additional entitlements from the secondary market and then subscribe to it.
But my question is mainly what happens to those who let their rights entitlements expire? Those unsubscribed rights are entirely subscribed by promoters or is there anyway a retail shareholder can subscribe to those unsubscribed rights entitlements?
The reason I am asking this is in all likelihood, the ones who sell their rights entitlement on the exchange will do so at a premium to the subscription price given that there is a huge difference between the actual share price and the rights subscribtion price and there may not be a arbitrage opportunity to buy the rights at a premium.
Thanks a lot once again to the community for your helping hand
~18% of the shares are held by DIIs and large investors, wonder how are they not objecting to this? Daylight robbery by promoters and not a single objection or voice of dissent on the concall.
Yes, that’s exactly what they said in the initial Rights Issue notification. They’ll subscribe to the entire unsubscribed portion.
~18% of the shares are held by DIIs and large investors, wonder how are they not objecting to this? Daylight robbery by promoters and not a single objection or voice of dissent on the concall.
Apparently when you’re not the CEO or on the Board, you’re not entitled to asking questions or having an opinion.
You have to look at the Letter of Offer. I could not find one for Heritage Foods - don’t think they have filed even a Draft LOF with SEBI. Let me know if they have. If they do, search for ‘Basis of allotment’ and you will find the answer.
I do not think unsubscribed rights can be appropriated by the Promoters at their own discretion if there are other applicants as well. I am no expert, but experience suggests it will certainly fall afoul of SEBI’s regulations.
I checked the LOF for two recent rights issue - Suzlon and Sundaram Finance Holdings Ltd. and how they will handle allotments to folks who have subscribed to more than what they were entitled to.
Here’s what each one says (from their respective LOFs):
Suzlon:
Sundaram Finance Holdings Limited
Very unlikely that you can have a rights issue manager saying that it will allocate it preferentially to the Promoters.
I haven’t gone through the all the posts, just the ones that ask how additional subscriptions will be handled; and will the Promoter corner all unsubscribed portion. I think the Promoter, in order to give confidence may say that they will apply so that any unsubscribed portion will also get subscribed by them.
In Sundaram Finance holdings rights, I got excess allotment where i held original REs. In another account, i tried with purchased REs where did not get in excess.
When you say you got excess, did you apply for excess rights or did you have to purchase the Rights Entitlement from the market?
I applied for excess rights.
Ex: for my 10 RE, Lets assume i was eligible for 10. Applied 14. Got 12. 20% excess allotment given beyond basic RE eligibility. If you dont apply, then you have not paid for it. So these unclaimed ones will quietly goes to Promoter. In Heritage case, Promoter can easily increase it this way provided, there is less participation from non promoters.
In the 30-year history of Heritage Foods, the key milestone of 2022 is the rights issue.
source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/c9c28245-08e5-42ac-b9cb-61035eae6057.pdf
Does anyone know when the company will proceed with the rights issue
Hard to guess. It would be great if experienced folks give us an idea about this. I think there is still a small possibility that the company does not go through the planned rights issue.
what the next steps in the process will be
Lead manager was announced. And today Registrar is announced. The one thing that matters for investors is the record date, as that is when the stock starts adjusting.
Board meeting on 13-Jan to consider record date for rights issue.
