The board of Great Eastern Shipping Company Ltd (GE Shipping) on Thursday approved the scheme for demerger of its offshore services business into a separate company, Great Offshore Ltd (GOL).
As a consideration of the demerger, shareholders of GE Shipping will be issued, at no cost, one fully paid share of Rs 10 each in GOL for every five shares of the company held.
Following this, the shares held in GE Shipping will stand re-organised to four shares of Rs 10 each for every five shares currently held.
In other words, a GE Shipping shareholder who has 100 shares of the company today will be given 80 shares of GE Shipping and 20 shares of GOL in lieu of his 100 GE Shipping shares.
The GE Shipping scrip on Thursday opened at its 52-week high of Rs 220. However, at the end of the day, the scrip closed at Rs 211 on profit booking losing 1.45 per cent.
Once the demerger becomes effective, the paid-up share capital of Great Offshore Ltd will be Rs 38.07 crore (Rs 380.7 million) and GE Shipping's share capital will be reduced to Rs 152.27 crore (Rs 1.522 billion) from Rs 190.34 crore (Rs 1.903 billion).
The net worth of GOL as on April 1, 2005 would stand at Rs 446.12 crore (Rs 4.461 billion), while that of GE Shipping would stand re-organised at Rs 1,741 crore (Rs 17.41 billion) against the existing Rs 2,187.12 crore (Rs 21.871 billion).
Since all shareholders will be issued shares in Great Offshore on a proportionate basis, there will be no change in the overall shareholding pattern on the date demerger becomes effective.
Vijay K Sheth, who has been managing the offshore business, will be the managing director of GOL.
Bharat K Sheth, who has been managing the shipping business, will continue to be deputy chairman and managing director in of GE Shipping.
Post the demerger, shares of GOL will be listed on the Bombay Stock Exchange and the National Stock Exchange.
The scheme of demerger approved by the board envisages the demerger of the offshore business consisting of drilling services, marine logistics, marine construction and port/terminal services, into a separate new company, Great Offshore with effect from April 1, 2005 through a high court-approved process.
"Great Offshore will focus on businesses including rigs, offshore supply vessel services, construction of barges and harbour tug services," Vijay Sheth said. Both the companies have agreed not to enter into other's business for one year.
"The intention is not to enter into other business after one year but to grow each business," Vijay Sheth said.