Gesco Plans Equity-To-Pref Conversion Offer

Gesco Corporation, the realty company, will be shortly coming out with an offer to its shareholders to convert their equity shares into preference shares. The exact timing and the details of the offer are being worked out.

The company has however finalised the broad outline of the offer, a copy of which is available with Business Standard.

Under the scheme being worked out, shareholders of Gesco Corporation will be given an option to convert their equity shares with a face value of Rs 10 to preference shares with a face value of Rs 10.

These shares will be however redeemed at Rs 30 per share after 30 months and they will carry a dividend of 10 per cent.

"The Gesco Corporation scrip has been hovering around the Rs 20 mark in the last three months. This does not do justice to the intrinsic value of the company. Gesco has therefore decided to offer its shareholders an exit option through conversion," sources close to the company said. The offer will be open to around 20 to 30 per cent of the shareholders.

The Mahindra group is the largest shareholder in Gesco with a holding of about 43 per cent. After the conversion the group's holding will increase by about two per cent. The other major shareholders in the company are the Sheths of GE Shipping.

Gesco Corporation shot into the media glare last year when Delhi based real estate developer Abhishek Dalmia launched a hostile takeover bid. The Mahindra group played white knight and bailed out the Sheths, the original promoters of Gesco through picking up a stake in the company through Mahindra Realty & Infrastructure Developers (MRIDL).

Later on, MRIDL demerged its realty and infrastructure businesses into Gesco Corporation. This resulted in the Mahindra group hiking its stake in the company further as they were allotted shares in lieu of this.