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Wednesday, Jan 14, 2004

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Preferenital allotment of warrants/shares — Moser Baer in talks with Warburg Pincus arm

Our Bureau

New Delhi , Jan. 13

MOSER Baer India Ltd (MBIL) has said it is in talks with Woodgreen Investments Ltd, an affiliate of private equity investment firm, Warburg Pincus, to issue 5.4 million shares as part of a proposal to raise funds for capacity expansion.

MBIL, one of the world's largest makers of compact disks, is planning to offer 5.4 million shares to Woodgreen, or any other affiliate of Warburg Pincus, at a price not less Rs 329 per share.

The board of MBIL has also approved a proposal to issue 5.4 million warrants to Woodgreen or any other Warburg affiliate on a preferential basis at the same price. Each warrant is convertible into one equity share.

"No deal has been done yet and we are in discussions," said Mr Rakesh Govil, General Manager, Treasury, of MBIL.

"The board will decide on the allotment and an EGM will be held on February 5," he said.

If Greenwood or any other Warburg affiliate picks up the 5.4 million shares, the firm's stake in MBIL will go up to around 28 per cent from about 24 per cent it has now, Mr Govil said.

The board of MBIL on Monday decided to issue 1.47 lakh ADRs or GDRs on a preferential basis to various institutions including existing shareholders at Rs 329 per share. Each ADR/GDR will represent 100 underlying equity shares. In order enable the fund infusion, the board has also approved increasing the FII holding limit to 74 per cent from 40 per cent. The authorised capital will also be hiked to Rs 150 crore from Rs 110 crore.

The proposed allotment of shares and warrants to the Warburg arm is in addition to the move to issue ADRs/GDRs. However, the total number of equity shares to be issued for raising the funds will not exceed 20.01 million. "The board will decide on the structure of the issue," he said. If issued at Rs 329 per share, MBIL will raise about 660 crore, which will be utilised to expand production of recordable DVDs (DVD-R).

"The DVD-R market is exploding faster than expected. In 2004-05, the global DVD-R market is estimated to be around 2.5 billion units. Our aim is to capture 18-20 per cent of the market and to achieve that, we need to expand our capacity," he said.

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