Gensol Engineering Board Approves 1:10 Stock Split, Rs 600-Crore Fund Raise Plans

Gensol Engineering Ltd. on Thursday received board nod to split its stock in the ratio of 1:10, and also to raise around Rs 600 crore through the issuance of warrants and foreign currency convertible bonds.

The stressed engineering, procurement and construction player intends to raise Rs 400 crore, through the "issuance of foreign currency convertible bonds or American depository receipt, or global depository receipt, and/or other global listed/unlisted securities with options of conversion into equity shares of company", according to an exchange filing.

The board has also approved raising of Rs 199.99 crore through the issuance of 3.57 crore warrants to promoter Jasminder Kaur on a private placement basis.

The warrants will be issued at Rs 56 apiece, after adjustment of sub-division of equity shares. This could mark an ex-split premium of 113% going by the stock's current market price.

This comes three days after the company said in a press release that its promoters were infusing Rs 28 crore in the firm through the conversion of warrants into equity. These warrants would be converted into 4.43 equity shares at a price of Rs 871 per share, it said on Monday.

Stock Split

Gensol Engineering's board has approved the sub-division or split of existing equity shares of the company from one equity share having face value of Rs 10 each into 10 equity shares having face value of Rs 1 each.

This would increase the company's authorised total shares to 75 crore from 7.5 crore. The total issued, subscribed and paid up capital will rise to 38.4 crore shares from 3.84 crore.

The stock split is expected to come into effect "approximately three months from the date of receipt of approval of the shareholders of the company," the exchange filing noted.

Shares Under Pressure

Gensol Engineering's scrip has been under pressure, hitting the lower circuit for the fourth consecutive day. The announcement related to the stock split and fundraise were made when the shares were locked in the 5% lower circuit.

The stock has been consistently slipping since Feb. 24, hitting multi-month lows as ratings agencies marked concerns over the company's delays in servicing the term-loan obligations. The firm also came under scanner for alleged falsification of data.

Credit rating agencies ICRA and Care Ratings downgraded Rs 2,050 crore of Gensol's debt — over Rs 1,640 crore in long term and over Rs 400 crore in short term debt facilities — to default status earlier this month.

Shares of Gensol Engineering on Thursday were locked in the 5% lower circuit at Rs 262.25 apiece on the NSE, compared to 0.13% decline in the benchmark Nifty 50.