Tera Software Limited proposes Rs 14.9999951 crore warrants

Tera Software Limited has proposed issuing up to 514,491 fully convertible warrants to two promoter-group investors at Rs 291.55 each, aggregating Rs 14.9999951 crore. Tera Software says conversion into equity shares within 18 months of allotment would raise promoter holding to 49.61% from 47.53%, without triggering an open offer.

What does Tera Software's proposed warrant issue involve?

Tera Software proposes to issue up to 514,491 fully convertible warrants through a preferential allotment on a private-placement basis. The stated issue price is Rs 291.55 per security, and the aggregate proposed issue size is Rs 14.9999951 crore. The disclosure identifies the instruments as fully convertible warrants rather than immediately issued equity shares.

The proposal is structured as a future equity conversion route, rather than an immediate allotment of 514,491 equity shares. Tera Software says each warrant is convertible into one equity share within 18 months from its allotment date. The supplied disclosure does not state an allotment date or the date on which the 18-month conversion window would begin.

The Rs 14.9999951 crore amount represents the disclosed aggregate size of the proposed issuance at Rs 291.55 per warrant. The announcement does not state the intended use of proceeds, project allocation or capital-expenditure plan for the proposed funds. It instead sets out the proposed allottees, conversion mechanism and the anticipated post-conversion shareholding pattern.

Who are the proposed investors in Tera Software warrants?

Tera Software has named two proposed allottees: Mr. T. Madhu Mitra, a whole-time director and promoter-group member, and Mrs. T. Pavana Devi, a promoter-group member. Mr. T. Madhu Mitra is proposed to receive 257,246 warrants and Mrs. T. Pavana Devi 257,245 warrants, together accounting for all 514,491 proposed instruments.

Before the proposed issue, Mr. T. Madhu Mitra holds 841,308 equity shares, equal to 6.72% of the disclosed shareholding pattern. Following conversion of 257,246 warrants, his holding would rise to 1,098,554 shares, or 8.43%. His disclosed percentage ownership would therefore increase by 1.71 percentage points in the post-conversion structure.

Mrs. T. Pavana Devi holds 574,760 equity shares, or 4.59%, before the proposed issue. If her 257,245 warrants convert, her holding would become 832,005 shares, representing 6.39%. That is a 1.80-percentage-point increase in the ownership percentage shown in Tera Software's post-conversion table.

When can Tera Software warrants convert into equity shares?

Tera Software says the warrants can convert into an equal number of equity shares within 18 months from the allotment date. This means the 514,491 warrants could become up to 514,491 additional equity shares if the warrant holders convert them during the stated tenure. The 18-month period runs from allotment, rather than from the date of the disclosure.

The filing specifies that the tenure of the instruments will lapse if conversion does not occur within 18 months. Tera Software does not disclose an interim conversion timetable, staged exercise schedule or a date by which the two proposed allottees must make a conversion decision. It also does not state whether any warrants were outstanding before this proposed allotment.

The stated 49.61% promoter holding is an effect after conversion rather than a current ownership position. Until conversion occurs, the proposal concerns warrants and not the corresponding additional equity shares. The disclosure provides the issue price of Rs 291.55 per security but does not provide a separate payment or exercise schedule.

How would Tera Software's ownership pattern change after conversion?

Tera Software says aggregate promoter holding would increase to 49.61% after conversion from 47.53% before the proposed issue. This is a 2.08-percentage-point increase in promoter ownership in the disclosed post-conversion pattern. The shift reflects the proposed conversion of 514,491 warrants allotted solely to the two named promoter-group investors.

Public holding would decline to 50.39% from 52.47%, also a movement of 2.08 percentage points. The announcement does not identify public shareholders selling any shares as part of the proposal. Instead, the percentage change is shown in a post-conversion capital structure that includes equity shares issued upon warrant conversion.

Tera Software states that the proposed issuance would not trigger an open offer under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. The company records the outcome as “No” in its disclosure. It does not provide the regulatory calculation or a further explanation for that determination.

What else does the disclosure say about the proposal?

Tera Software classifies the proposed transaction as a preferential allotment on a private-placement basis. The company describes the securities as fully convertible warrants, linking the ultimate shareholding changes to conversion rather than to the proposed warrant allotment itself. The two proposed recipients would receive nearly equal allocations, differing by one warrant.

The proposal would take Mr. T. Madhu Mitra's disclosed holding from 841,308 to 1,098,554 shares and Mrs. T. Pavana Devi's from 574,760 to 832,005 shares after conversion. Together, their proposed 514,491 warrants equal the entire announced issue. The filing does not state a purpose for the Rs 14.9999951 crore proposed issue or disclose a planned deployment of funds.

The supplied announcement also does not state the date of shareholder approval, allotment or conversion. Its defined timing mechanism is the 18-month period from allotment, after which unconverted instruments lapse. The ownership percentages of 49.61% for promoters and 50.39% for public shareholders are therefore conditional on conversion.

Conclusion

Tera Software's proposed preferential issue would place 514,491 fully convertible warrants with two promoter-group investors at Rs 291.55 each, for an aggregate Rs 14.9999951 crore. If the warrants convert, promoter ownership would increase by 2.08 percentage points to 49.61%, while public ownership would decrease by 2.08 percentage points to 50.39%, according to the company’s disclosed pattern.

The next disclosed item to watch is the allotment date, because it starts the 18-month conversion period. Tera Software says any warrant not converted into an equal number of equity shares within that period will lapse; the announcement does not specify the allotment date or a use of proceeds for the proposed Rs 14.9999951 crore issue.