Business Daily from THE HINDU group of publications
Saturday, Mar 15, 2008
ePaper | Mobile/PDA Version
Business Daily from THE HINDU group of publications Saturday, Mar 15, 2008 ePaper | Mobile/PDA Version |
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Corporate
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Mergers & Acquisitions Titagarh Wagons plans to buy sick unit Cimmco for Rs 35 cr
Titagarh Wagons plans to acquire 51 per cent in Cimmco Birla. The company and JP Morgan Mauritius entered into a cooperation and funding agreement for reviving Cimmco. It has also entered into a ‘compromise deed’ with the unions of Cimmco. Amit Mitra Mumbai, March 14 Railway wagon manufacturer Titagarh Wagons Ltd, which is entering the capital market with an IPO that opens on March 24, and the JP Morgan Group, will be jointly presenting a scheme for revival and rehabilitation of the sick Cimmco Birla Ltd (CBL) to BIFR in June or July this year. This is expected to pave the way for TWL’s proposed acquisition of CBL, part of the S.K. Birla Group, for Rs 35 crore, which is expected to significantly add to Titagarh’s wagon manufacturing capacities. TWL and JP Morgan, which had acquired a portion of the total outstanding secured debt of CBL, have stepped up their efforts to prepare the revival scheme, which will involve restructuring of the borrowings and other liabilities of the sick company, sources said. This comes in the wake of the huge demand in the market for flat wagons for transporting containers after the container freight sector was thrown open for private participation about two years ago. Mr Umesh Chowdhary, TWL’s Managing Director, was not willing to confirm the date for submitting the revival scheme to BIFR, but said: “this will happen very soon.” Funds, infra“We intend to acquire 51 per cent stake in CBL. Additional funding requirements beyond the amounts agreed may be funded through various methods, including debt funds or a fresh infusion of funds by TWL group,” he told Business Line. He said CBL had good infrastructure, which would help TWL to grow its core and allied operations. BIFR, at its proceedings held on August 21, 2002, had declared CBL a sick industrial company. CBL subsequently declared a lockout at its plant at Bharatpur in Rajasthan and Delhi following labour unrest, while its banking operations were frozen following cancellation of orders to the tune of 143.88 crore and bank guarantee invoked by Concor amounting to 38.68 crore. In 2006-07, CBL incurred a loss of Rs 54.88 lakh on a total income of Rs. 31.27 crore. About two and a half months ago, TWL and JP Morgan Mauritius Holdings entered into a cooperation and funding agreement for proposing a revival scheme for CBL. The JP Morgan Group is currently in negotiations with CBL’s other secured lenders to acquire a significant portion of the total outstanding secured debt of CBL. ‘Compromise deed’TWL has also entered into a “compromise deed” on March 5, 2008 with various labour unions of CBL for settlement of the labour disputes. TWL is in the process of expanding its capacities, including setting up a Rs 18.7-crore EMU manufacturing unit with a capacity to produce two rakes of EMUs per month. It also plans to invest another Rs 18.84 crore to modernise and expand its two existing plants at Titagarh and Uttarpara in West Bengal, apart from setting up an axle machining and wheel-set assembly facility at a cost of Rs 12.93 crore. More Stories on : Mergers & Acquisitions | Railways | Sick Units
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