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Ambar Singh Roy
Kohinoor Mandal

Issue is part of company's corporate debt restructuring package

Kolkata , May 13

The Reliance-Anil Dhirubhai Ambani Group (ADAG) is picking up a strategic stake in the ailing Kolkata-based cable manufacturing company Nicco Corporation Ltd.

ADAG will be subscribing to a portion of the optionally convertible cumulative preference shares issue of Nicco Corporation Ltd. Of the total issue size of Rs 20 crore, the ADAG is picking up Rs 5.88 crore.

The issue is part of the corporate debt restructuring (CDR) package of Nicco Corporation and is being managed by the Mumbai-based Brescon Corporate Advisors Ltd.

ADAG, however, is not the only organisation to pick up a stake in Nicco Corporation. According to Mr Rajive Kaul, Chairman of Nicco Corporation, there are several other investors as well. "ADAG is just one of them", he told Business Line.

Of the total issue of Rs 20 crore, Brescon has managed to sell Rs 12.6 crore. Talks are underway on this score with other companies as well. As per the terms of the CDR package, the issue has to be closed by September 30 this year.

Mr Kaul added that Reliance Telecom, which is now under the ADAG fold, had for long been a customer of Nicco and, as such, it is aware of the strengths of the latter.

He, however, could not provide any indication as to the exact percentage of the stake ADAG would be holding because it would depend upon the extent of conversion that the company would exercise. The shares would be issued in the name of Sonata Investment Ltd, an ADAG firm.

Shareholders of Nicco Corporation have approved the proposal at the court-appointed extra-ordinary general meeting of the company held last Friday.

The CDR package, which was approved on March 21, has substantially reduced the liabilities of Nicco Corporation. The company hopes to register a profit for the accounting year ended March 31, 2006.

"We would take a few more years to get back to the dividend list but with the restructuring we have succeeded in reducing the turnaround time by at least two years," he said.

More Stories on : Preferential Allotments | Sick Units | Mergers & Acquisitions

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