Subex in deep red hue

Subex announced yesterday after market closure that it has allotted 1,86,27,341 equity shares pursuant to the conversion of US$ 4,320,000 out of the Company’s US$ 39.61 million bonds that are outstanding under the US$ 127,721,000 5.70% secured convertible bonds. These bonds are due on 30th Nov 2017. Post the conversion, FCCBs aggregating to US$ 35.29 million are outstanding under the said Bonds.

Subject to the listing & trading approval of the NSE and BSE the paid up share capital of the company has increased from Rs. 351,63,69,810 to Rs. 370,26,43,220.

Recently, Subex had reset its conversion price on FCCB from #8377;22.79 to #8377;13 a share, close to its current market price.

In FCCBs, conversion price is usually set at a premium to the market price as the assumption is that the price will only rise. But with price taking a knock, Subex had to reset its price, making it attractive for the bond holders. In the same breath, what it also means is that the equity dilution is larger for the Indian shareholders as more shares are being issued to match the debt.

The market is not happy with this development as the stock has taken on a deep hue of red – price is down 3.5% currently at Rs.15.25, with an intra day low of Rs.14.60.