[Optimus Prime 06]

34 crore @7.7 rs
What’s that meaning
Additional 34 cr crore equity shares or 34cr rupees valued shares

Attachments:

1. 791a972d-ccc1-47e0-b21a-5a43d9e618db.pdf

[odysee]

Unless the 34 crore warrants are issued at 7.70 payable now and converted later into shares at a rate to be determined or at a much higher predetermined price which we will get to know about later.
Anyone willing to comment?
Cannot imagine an issue of such a huge quantity at a total price of 7.70 which will increase the number of shares to above 85 crore ( equity of 170 crore plus) after conversion.
Something doesn’t add up.

[JRS]

If they don’t pay within the stipulated time,and will not convert into the Equity shares then warrant expires and they may loose 64.45 crores I believe.

If the stocks rises then who ever purchased will definitely convert the warrant to equity. If not he may let it go.

And to arrive at ₹7.7 they cannot arrive it arbitrarily, it is accordance to the guidelines of SEBI I.e Average of 6months Market Price of Share.

[Logan]

@odysee, my phone was switched off so I saw the update now.

It’s really shocking to see this level of dilution. The PO allotment itself was a big dilution but I didn’t care much at that time because that money would’ve helped close off Axis debt and that dilution is nothing compared to this. Even if it for stable investors, I don’t like this level of dilution.

Also, I can’t understand why they can’t reveal details of the entity or individuals. That’s why I always say that they should improve corporate governance. One update should contain all the information needed on this topic. They need to appoint a board member who has experience in the market. They creating unnecessary confusion.

[Deepak]

Series of News flow today.
1.bcg ranked 400 in fortune 500.
2.bcg circuit filter revised to 10%.
3.issuance of 34 cr warrant @7.7 probably to mr skr(specific indvidual mention in notice given to bse).

[Optimus Prime 06]

Till now, I thought,we retailers holding 10% of entire shares.now due to this dilution.we r not even 5%.
Frankly speaking,if I am skr, I would have done the same.if he believes the real value of the share is more.
I want to see who is buying this..if they issued warrants to strong investors.
Now, they have to concentrate on daum ,axis bank loan and other unresolved problems..if they do that, we can see minimum 5x returns.
Just see, it ranked 400 in fortune india 500 list.
Let’s hope for the best..
Note:- even I too frustrated with this scrip

[Logan]

They should mention for what purpose these warrants are issued. They miss out the basic information that needs to be shared and later try to give clarification. Same happened with the asset impairment. They updated after 2 or 3 days.

Diluting this much and not even telling for what purpose and to whom these warrants are issued looks unprofessional. When the market sentiment is this negative, they keep on repeating these mistakes again and again. Of course they’ll give details later but what’s the use? They create confusion and later give clarification. My question is why create unnecessary confusion. Why not give complete details at the beginning itself.

This all comes to corporate governance and as we always say, they should improve a lot in that.

[Sumeshnair2005]

Yes sandy though huge equity dilution is a big setback which may bring down the target price from 500 to 100 ( true value).. but the fact that someone wil invest money equal to current market cap means that its earnings and prospect geninue and market cant ignore it anymore i thk

[bitran]

Drpram #9601,
If every promoter think likes this, what would be the situation of our market. There is no problem if promoter subscribe to warrants as we need to recognise their efforts but there is a way to do this with justice to all stakeholders. Atleast, minimum they should have publish the name of the investors to whom the assignment is happening. We have to fight to know that? Is that fair? Having said this,In the interest of all long term holders, I hope what you said is correct and now we see the share price rising to a respectable level. It is true what Mr.Nair also mentioned it is difficult for market to ignore when someone invests close to the market cap in a company. This time, I really hope there is no further hidden agenda…

[Logan]

They should at least say why they are issuing the warrants. When everyone was expecting LOC, they come up with warrants and don’t give proper details. We wouldn’t be this anxious if they had told us to whom these are issued to and why. That’s it.

Axis, LOC are not in their control because it involves other parties but this is in their control. Transparency is very important and it’s the very basic thing to do being a public company. People will lose trust if they update us after many days. We deserve to know more details when the dilution is this size.

[sagraa]

SKR knows that Axis , Daum and LoC are almost there and it’s time for inflection or J curve to start.

Considering this he is allocating 34 Cr warrants.
He will break it in three almost equal parts.
One for himself.
Second is for Mr Vijay Kachnara
Third is for a well known investor who has excellent reputation in Indian market.

By doing this promotor stake will increase to 50%
and by the reputed investor inclusion various financial channels and experts would cover BCG. Price would increase automatically.

SKR knows that now price can’t be suppressed and he doesn’t want to drain fruits of his hardwork in someone else pocket.

Later, couple of years down the line, he will insist BCG to buyback shares and reduce overall equity and increase promotor shares to 75%

This is a likely scenario and overall very positive.

[odysee]

@bitran and @Logan, I am still hopeful that the details of the proposed issue of warrants will be disclosed in the revised notice of the AGM to the shareholders, as is the norm. After all, how can shareholders be expected to vote on a proposal this significant, without assessing and understanding what the proposal is, and how it would impact the company and the interests of the shareholders?
I truly hope that apart from the promoter group, a strategic investor is being issued warrants and is brought in to add value to the business and growth of the company.
Just bringing in a cash-rich investor would only provide funds, but the value addition may be restricted to their bringing about stability ( if long term players), or inspiring other institutional and potential international investors.
Not sure if this move is for just ensuring adequate promoter control and some funds coming into BCG for meeting immediate financial obligations, but the size and quantum raises questions about the fate of the LOC.
The strategy at play here is obviously not in the public domain, but may be revealed over time, starting with the AGM notice as a first step.
The very fact that the perceived price management was done over the preceding months, to enable such a large issue at a price that will pass regulatory muster, indicates planning for the warrant proposal some time ago, and is not a sudden knee-jerk decision by the management.

[Logan]

@odysee, at this point without any information we can only speculate.

This is just a speculation, not to be taken seriously.

1) I don’t understand why they want to raise funds when they are seeking LOC. Maybe LOC is put on hold and they want to close off Daum settlement with the money raised by issuing warrants.

260crs is still not a guarantee but they will get 65crs. 31crs was raised from po allotment and it is not yet used anywhere because of Axis. If we add this the total comes to 96crs. 96crs is $13M. Maybe $3M from internal accruals so totally $16M. When Daum is settled, the price may go up.

2) If LOC, then 260crs is close to 1/3rd of the digital business receivables. Maybe 1st line is 65crs and instead of paying interest they are giving shares/warrants?

3) I don’t think promoters have 260crs, so they will bring an outside party who may be is a stable investor. Part of the warrants may go to promoters and the rest to some entities. Looking at the past history of the price, the investors want warrants instead of buying from the open market. They look at the business and they want a piece of it but looking at the price they get two thoughts so they opt for warrants. Doing this will also give the company extra money. If they buy from the open market that money doesn’t come to the company.

(These are all my speculative guesses and should not be taken seriously. I’m just sharing my opinions. When they don’t provide proper details, we make up these crazy theories).

[bitran]

@Odyssey,

This is pure speculation and read it only for fun. As Logan ji mentioned, if company do not share proper details, investors will speculate. (May be SKR likes to read these funny stories for time pass and hence he purposefully not sharing the investor details ;))

1. SKR has to give equity to someone. So, when dilution happens, promoters also needs to subscribe so that they have controlling stakes. ( Else in future how can they come up with these sort of wonderful, shareholder friendly measures and expect to get approvals ;))
2. LOC might be delayed or cancelled and they want money to settle Daum. So, the equity dilution.
3. LOC is ready and they are ready to inform to the broader community. Once that happens, share price will increase for certain, before that increase the promoter stake. They do not have entire money to buy from market as most of their money is stuck in the company. So, go for warrant together with an investor as warrant means only 25% initial money.

Now who are the investors?

Some investor whom SKR has convinced to invest in the company. Could be a big global/local investor, Lender of LOC (Financial Institutions), Muskan (to compensate for PO ) or any of his friends ( Does he has more wealthier friends in his IIT batch ;)) It could also be Daum wherein they accept equity instead of cash. Any sort of permutation combination from the above is a possibility.

He may even surprise us with something new which even we missed to speculate just like this equity dilution. It was nowhere in scope. We always thought, he will buy back from market when he gets the LOC money as LOC money was always “Almost ready for long time”. May be he knows about this dilution but not revealed to investors.

[tanv151]

@Admin – Does it makes sense to move all the warrants related to posts to ‘General discussion’ thread? If not create a separate one, for future reference, just in case.

@Logan, @bitran and @odysee – LOC is a done deal. SKR is a smart man, way too smarter than we can expect. He is simply trying to increase promoters’ holding in the process of bringing a new wealthy & stable investor thru this warrants issue. The quantity and the price fixed for this issue is no doubt disappointing. However, I am sure this is all part of a bigger plan. This is just one of the many surprises he is going to throw at everyone. I expect a series of announcement to come our way. There’s a saying, “Work for Tatas and invest in Reliance” and that said for a reason. He always kept everything in his control and will continue to do so.

[bitran]

@tanv,

We all know that SKR is a smart man and that is why we invested in his company. Honestly, I do not have any problems with promoter increasing their stake even if it is at face value of 2 Rs. There is no doubt about the sweat, determination, hardwork they have put in and so, if they feel they deserve a bigger pie, why not? The problem is in the way in which it has been done. Anyway I hope atleast from now on, he shows some empathy to his retail shareholders. Hoping for the best.

[sagraa]

Once again my guess we’re proved wrong.
I was of believe that SKR will increase his stake but it seems he is in a desperate situation and has left with no other option but to sell the company to 59 unknown people.

LoC is not approved since Axis case is pending. He has to pay Axis and Daum. No-one would lend him so he left with no other option to sell this company. None of them is a known or reputed name.

Once again he failed to keep his promise of getting stable investor.

I think for next 18 months, price will be suppressed to a level below 5 so as not to allow these 59 people convert their warrants otherwise SKR will loose control of BCG if all warrants are converted.

Strange to see that , some of these investors are being allocated 50k warrants also. He could have asked us, we could have also applied for few lakhs warrants.

I can just hope for wellbeing of my invested money other nothing substantial on ground.

This is the height of desperation.

[sagraa]

I always supported and believed SKR but this time I am sure his action of selling warrants to these 59 people is not in interest of either the company or the shareholders.

He should have allocated these to promotors only or one or two dominant market po players.

[Author]

Posts