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Pantaloon Retail boards approves 1:10 bonus issue

This article was posted on Jul 25, 2008 and is filed under Press Releases

The Board of Directors of Pantaloon Retail (India) Limited today approved a bonus issue of shares with differential voting rights (DVR) to the existing shareholders of the company, subject to necessary shareholder and regulatory approvals.

The bonus issue has been structured in a unique and innovative manner, which enhances the value creation for existing shareholders by providing them bonus shares with additional dividend payouts on such shares. It also provides the company enhanced flexibility for growth plans. Explaining the rationale behind such an initiative, Mr. Kishore Biyani, Managing Director, Pantaloon Retail (India) Limited said, “Our company is a product of the new economy and has been at the forefront of innovation and value creation. Differential Voting Rights (DVR) has become a widely used innovative instrument in global markets and by coupling a bonus issue with a DVR, we believe we are enhancing alternatives available for our shareholders. DVR meets the different requirements of different shareholder groups and with this issuance; subject to necessary approvals we will be introducing a new financial instrument for the new economy.”

These bonus issue shares will be offered, subject to necessary approvals, to all shareholders of the company in the ratio of one bonus share with differential voting rights for every ten equity shares held by shareholders on the record date. The record date will be fixed after the necessary approvals are obtained by the company.

The new shares called Class B shares will entitle the shareholders to an additional 5% dividend over the regular dividend payable to Class A shareholders in any financial year. Also, ten such Class B shares will carry one vote.

While DVR is a well accepted instruments used by leading blue-chip companies in international markets, Pantaloon Retail (India) Limited will be among the first companies to offer such a financial instrument in India. Some of the global companies that have issued shares with differential voting rights include the likes of Berkshire Hathaway, Google and News Corp.

Enam Securities Private Limited is the advisor to Pantaloon Retail to this issuance.

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