Suzlon Energy Launches Rs 1,200 Crore Rights Issue Today  

From October 11 to October 20, Suzlon Energy (SUZLON) will launch its Rs 1,200 crore rights issue. The new shares will list on November 3 and be allotted on October 31.

Five additional shares may be purchased for every 21 shares owned in the appropriate issuance by any qualifying Suzlon Energy shareholder.

Suzlon Energy stated in a notice to the stock exchanges that the new shares have a face value of Rs. 2 and a premium of Rs. 3, making the total price per share Rs. 5. The shares of Suzlon Energy are being issued at a discount to the market price as of October 10, when their share price on the Bombay Stock Exchange (BSE) was Rs 7.65.

“Issue of 5 equity shares of Rs. 2/- each for cash at a premium of Rs.3/- on rights basis for every 21 equity shares held,”  according to Suzlon.

Himanshu Mody, the chief financial officer of Suzlon Energy, stated that they are trying to acquire money through a right issue of up to Rs 1200 to reduce their refinanced debt in an interview with PTI back in August.

When a company intends to increase its subscribed share capital by issuing new shares, Section 61 of the Companies Act, 2013 states that existing shareholders shall have the first opportunity to purchase. This is accomplished by sending them a letter of offer subject to some conditions.

Now, if the company issues a rights issue of 2000 shares, the number of shares that have been subscribed to rises to 12,000, and if you don't purchase any more shares, your holding would fall to 41% (5,000/12,000).

After the rights issue, the shareholder has the option to buy first, but it is up to him if he wants to maintain the previous holding percentage. In other words, you have the exclusive right to purchase the shares before the company makes them available to third parties.