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Pantaloon in rejig mode, to raise funds

Mumbai, April 11: Pantaloon Retail is planning to restructure its business and raise fresh funds through equity.

The Pantaloon board will meet on Monday to take a decision, the company informed stock exchanges today.

The board will consider realigning its business lines according to verticals and create separate legal entities for the purpose.

Pantaloon said it would also issue shares/convertible securities or warrants convertible into shares to promoters or investors on a preferential basis, according to the guidelines of the Securities and Exchange Board of India (Sebi).

Officials of Pantaloon were not available for comments on the proposed restructuring. However, rumours abound that the company may spin off Big Bazaar, its flagship business and the largest contributor to its topline, into a separate company and even get it listed.

An industry source said Pantaloon may merge some of its subsidiaries or business lines as part of the restructuring process.

Pantaloon also has a host of subsidiaries in the areas of capital, consumer finance, brand development, retail media, logistics and retail-led technology services.

These include Future Logistics, which provides end-to-end logistics solutions, Home Solutions Retail, a home products subsidiary, Future Brands and Future Media. Pantaloon may spin off some of the businesses into separate companies or wait for the businesses to gain more vigour before doing so.

A subsidiary Future Capital Holdings is already listed on the stock exchanges.

Pantaloon had earlier said it planned to unlock value in these subsidiaries.

“In financial year 2008-09, most of them (subsidiaries) will come into their own, pursuing aggressive growth plans to achieve scale and garner increasing market share. The company will be able to unlock value in these businesses by listing them at an appropriate time,’’ Pantaloon had said in its 2007-08 annual report.

The restructuring move comes at a time when the organised retail industry is passing through a tough phase because of low consumer spend. Pantaloon has also been affected by this trend.

Recently, Fitch revised the rating outlook on Pantaloon to negative from stable and it downgraded the company’s short-term debt instruments.

Fitch had said the downgrade reflected the ongoing pressure on Pantaloon’s operating cash flows during the first quarter of fiscal 2008-09 (Pantaloon’s fiscal ends in June) because of slowing sales growth, primarily in lifestyle retailing and to some extent in value retailing.

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