Pantaloon not to convert warrants, forfeits deposit

The promoters of Pantaloon retail have decided not to convert into equity the one crore preferential warrants issued to it, the Kishore Biyani-promoted company said on Friday.

Pantaloon, the country’s largest listed retailer, has forfeited the Rs 100-crore deposit money. It was 25 per cent of the warrant price and transferred to reserves, the company said in a statement to the exchanges.

The final date for conversion was December 28 this year.

It was on June 29 last year that Pantaloon issued warrants at Rs 400 to Future Ideas Realtors India, a promoter group company. Then, the stock was trading at two to three per cent premium to conversion price.

However, a sharp drop in the stock price rendered it unattractive for the promoters to convert the warrants to equity, said analysts. “The warrants are not in money,” pointed out Abhishek Ranganathan, equity analyst at MF Global Sify Securities. “Why would anybody convert the warrants now when stock is trading lower than the conversion price?”

The stock ended the day at Rs 129 per share, nearly 67.75 per cent lower than the conversion price.

Kishore Biyani could not be contacted for the comments.

The stock went up after the government announced the foreign direct investment in retail on November 25, but slid 24 per cent in five trading sessions after the decision was put on hold on December 6.

The stock traded flat on Friday and went up 0.19 per cent on the Bombay Stock Exchange.