Pref Issue To Toronto Bank Lifts Subex

Shares of Bangalore-based telecom company Subex Systems today hit the upper circuit filter of 20 per cent on news that the company's board of directors has approved to issue 2,13,770 equity shares of Rs 100 each to Toronto Dominion Bank on preferential basis. The preferential allotment is at 81 per cent premium to the today's market price of Rs 55.25.

The market has been abuzz with talks of preferential allotment at a premium forthcoming from the company for the past many days. As a result, the stock rose recently after a correction. From a 52-week low of Rs 25 on October 12, 2001, it jumped 160 per cent to a high of Rs 65.15 on December 10, 2001, after which profit-taking set in.

From the Rs 65.15 level, the stock shed 41 per cent to Rs 38 on December 27, 2001, only to recover again. The volumes on the counter have varied widely from a low of less than 10,000 shares a day to a high of nearly 5 lakh shares in the last few months.

As per company's announcement, Toronto Dominion Bank will be picking up the stake in lieu of an unpaid loan of a Canadian company, Magardi Inc, whose IT assets were acquired by Subex in May this year. Magardi, which had availed of a loan from the Toronto-Dominion Bank, went bankrupt early this year and could not pay back the loan to the bank.

Subex bought the assets of Magardi and partly paid for it in cash. Magardi, which has a suite of revenue security products that include OUTsmartTM, a real-time Wireline Fraud Management System and INchargeTM, a billing verification system, had a list of high-profile clientele, which includes AT&T, Sprint and Teleglobe.

For the second-quarter ended September 30, 2001, Subex registered a decline of 57.5 per cent in the net profit to Rs 1.24 crore compared with Rs 2.92 crore in the corresponding period of the previous year. Net sales of the company rose 12 per cent to Rs 14.31 crore from Rs 12.78 crore last year.