The Hindu Business Line : Essar Steel to raise $500 m thru convertible instruments

ESSAR Steel Ltd is raising $500 million through an issue of convertible instrument overseas to fund the acquisition of 51 per cent equity in Hygrade Pellets Ltd and to pick up 100 per cent equity in Steel Corporation of Gujarat Ltd. Both acquisitions would be from Stemcor, UK. The Essar Steel board of directors took the decision today and intimated the stock exchanges. When contacted, company officials said this was just and enabling resolution, pending approval of the shareholders and valuation.

The Vizag-based Hygrade Pellets currently operates a 4 million tpa iron pellet plant and is expanding its capacity to 7million tpa. It is also setting up a 267-km-long slurry pipeline to carry iron ore from Bailadila to Vizag.

Meanwhile, the Hazira-based Steel Corporation of Gujarat Ltd has partially commissioned its 1.2 million tpa cold rolling and galvanising plant.

The convertible instruments up to an amount of $375 million are being issued to Prime Holdings Ltd, Mauritius (existing promoters) and up to $125 million to Asia Steel Holdings Ltd, Mauritius (non-promoter).

The company is yet to decide what instrument it plans to go for. The issue will be made in accordance with applicable laws, rules, regulation and guidelines.

The exact consideration for acquiring shares in the two companies will be based on valuation that is yet to be initiated. The company is yet to decide the date of the shareholders' meeting.

More Stories on : Mergers & Acquisitions | Steel | Overseas Borrowings

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