The Hindu Business Line : Welspun pref allotment to Temasek, promoters gets nod

THE board of directors of Welspun India on Monday approved a proposal to raise $38 million through a preferential issue to Dunearn Investments (Mauritius) Pte Ltd (a wholly-owned subsidiary of Temasek Holdings of Singapore) and the promoters of Welspun India Ltd.

The investment by Temasek is subject to satisfactory due diligence, necessary approvals and execution of appropriate customary, binding and definitive agreements.

Dunearn Investments (Mauritius) Pte will be allotted 90.8 lakh equity shares at Rs 130.25 per share, aggregating Rs 118.3 crore ($27 million). It will also be allotted 16.81 lakh convertible warrants at Rs 130.25 per share, aggregating Rs 21.9 crore (equivalent to $5 million). The promoters of Welspun India will be allotted 20.17 convertible warrants at Rs 130.25 per share aggregating Rs 26.28 crore (equivalent to $6 million) and carry an option to convert into equity shares at Rs 130.25 per share anytime within 18 months from the date of allotment of the warrants.

The funds would be utilised to part-finance the company's inorganic growth plan and/or expand its weaving capacity and also enhance the spindle facility. The end-use of the fund also includes retail initiatives, brand development and distribution alliances within India. This growth will be financed partly through the proposed issuance and the balance through debt at 2-3 per cent interest (via TUF loans).

These initiatives would enable the company to reduce time to market home textile products particularly in the bed linen side, enabling better utilisation of capacities.

Further, it would reduce the dependency on external market for procurements of higher thread count of grey fabric and yarn. The presence of ICICI Venture and Temasek on the board is likely to provide strategic inputs, strengthen management processes and corporate governance.

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