Future Group intents to execute a full demerger of Pantaloons retail format from Pantaloon Retail India (PRIL). On completion of the demerger process, subject to necessary and statutory approvals, the demerged entity will be automatically listed on the stock exchange.
The Pantaloons format, launched in 1997, has over the years become the leading fashion retail format in the country with 65 stores in 35 cities, along with the reverse logistics chain Pantaloons Factory Outlet that has 21 stores. These operate through a combined retail space of over 2 million square feet.
The business is expected to post a turnover of around Rs 1700 crore by the end of the financial year in June 2012. In the medium term, the format is expected to add 20 stores annually and reach out to a larger customer base in leading cities across the country.
Further, the demerged entity, subject to necessary and statutory approvals, will invite an investment from Aditya Birla Nuvo (ABNL). ABNL will subscribe to debentures amounting to Rs 800 crore issued by PRIL. On completion of the demerger process, the debentures will convert into equity in the demerged entity of the Panatloons format. The existing shareholders of PRIL, including its promoters will continue to own shares in the demerged entity. Post demerger, the total debt of Pantaloon Retail will be reduced by Rs 1600 crore.
The board of directors of ABNL and PRIL has in-principally approved the proposed transaction and it is subject to the finalization of the Scheme of Arrangement, due diligence and statutory and other approvals. JM Financial acted as the sole financial advisor to the transaction.
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