The Hindu Business Line : Hindalco rights issue price fixed at Rs 96

Mumbai Aug 14 The board of the Aditya Birla group promoted Hindalco Industries on Thursday fixed the price of its rights issue at Rs 96 an equity share.

The rights issue is part of the company’s take out finance to replace the $3.03-billion bridge loan it had taken to acquire Canadian aluminium maker Novelis in February 2007.

The company stock fell by 2.69 per cent to close at Rs 135.80 on BSE today.

3:7 ratio

The rights issue price is lower than what had been expected by market participants. But the company’s board has tweaked the rights issue ratio from what had been initially proposed. The ratio will now be three equity shares for every seven equity shares held, instead of the 1:3 proposed earlier.

The company has fixed the record date of September 5 for the rights issue, it said in a statement.

Hindalco will be raising about $1 billion through the rights issue.

While unveiling its take-out finance plans in June 2008, the company had said that the balance $2.03 billion would be raised through domestic or international debt financing and part liquidation of treasury. The company is sitting on a treasury surplus of $1 billion.

The take-out financing is expected to be in place by November 10.

Last year, Hindalco had acquired Novelis for $6 billion, for which it had taken a bridge loan of $3.03 billion.

After the acquisition, Hindalco emerged as a global player in the aluminium market, with a presence in five continents and with a new product portfolio.

Novelis reported a net profit of $28 million for the period May 16, 2007 to March 31, 2008, against a loss of $265 million in 2006-07.

While Novelis produced products in the top end of the chain, Hindalco focuses on the bottom end of the product chain.