The ABFRL board has approved the business demerger of Madura Fashion into a distinct listed company

The ABFRL board has approved the business demerger of Madura Fashion into a distinct listed company

In addition to their current shares in ABFRL, shareholders of ABFRL will receive one share in ABLBL (now Madura Fashion and Lifestyle) for each share of ABFRL upon the conclusion of the demerger.

At their meeting on April 19, the Aditya Birla Fashion and Retail Ltd. (ABFRL) Board of Directors approved the proposal for a vertical demerger of ABFRL's business into Aditya Birla Lifestyle Brands Ltd. (ABLBL), a newly incorporated company that will be listed separately once the demerger is completed.

The statement follows the board of directors' authorization, granted at its April 1 meeting, for the management team to assess the potential vertical demerger of Madura Fashion & Lifestyle.

ABFRL said in a statement that it anticipates the demerger would provide substantial value for its shareholders since each of the listed companies will have unique capital structures, autonomous development paths, and chances to create value.

Following the conclusion of the demerger, all ABFRL shareholders will own the same number of shares in both businesses under an NCLT scheme of arrangement.

The following lifestyle brands will be housed under the recently listed company Aditya Birla Lifestyle Brands Ltd. (ABLBL): Louis Phillippe, Van Heusen, Allen Solly, and Peter England

--Sportswear brands: Reebok; --Casual clothing brands: American Eagle and Forever 21; —Innerwear business: Van Heusen

Aditya Birla Fashion and Retail Ltd. (ABFRL) will house the other companies in the meantime. They are as follows:

--Value Retail: Pantaloons & Style Up are the retail outlets for masstige and value fashion.One of India's most extensive ethnic wear portfolios, including designer wear collaborations and a newly acquired portfolio of TCNS brands, encompassing a range of events, price ranges, and customer categories

-Luxury - The Collective, Galleries Lafayette, and a few luxury companies' fast-growing connection to and premium platform--Digital brands: TMRW is a top portfolio of fashion labels that prioritize digital platforms.

In addition to their current ownership in ABFRL, the shareholders of ABFRL will receive one share of ABLBL for each share of ABFRL upon the conclusion of the demerger.

On April 19, ABFRL shares ended the day on the BSE 0.89 percent higher, at Rs 231.60 a share.

ABFRL went on to state that the two businesses would divide the business's assets and liabilities in line with the established regulatory procedures. Accordingly, the two businesses would divide the total ABFRL loan, which is projected to be around Rs 3,000 crore as of March 31, 2024. There would be a transfer of around Rs 1,000 crore of debt to ABLBL, with the remaining amount remaining with ABFRL.

In addition, ABFRL intends to seek around Rs. 2,500 crore in equity capital within a year after the demerger's conclusion in order to "strengthen its balance sheet and fund the growth of the remaining businesses."

The promoter group of the firm will back the planned stock issue in full.

It also said that the required approvals from creditors, shareholders, and regulators in addition to other usual clearances, would apply to the proposed demerger.