The Hindu Business Line : Pennar Ind lenders to get 43 pc equity by debt conversion

BANKS and financial institutions, along with mutual funds, are set to acquire a controlling equity holding of 43.42 per cent in Pennar Industries Ltd (PIL) with the help of corporate debt restructuring (CDR) package that enables them convert their debt into equity.

At present, the banks and FIs hold only 13.16 per cent in the PIL's paid-up equity base of 1.66-crore shares, while the mutual funds hold 7.58 per cent. The PIL promoters currently hold 29.37 per cent.

PIL is a Hyderabad-based ailing cold-rolled steel strips company.

Subsequent to the equity restructuring on account of CDR package, the banks and FIs would acquire 41.77 per cent holding, while mutual funds would hold 1.65 per cent, taking their aggregate holding to 43.42 per cent under the category of non-promoters' holding. The PIL promoters would end up having a holding of 42.88 per cent on the expanded equity, as they would also pump in further equity as a part of CDR package.

However, the company informed the shareholders that the proposed equity reduction and preferential offers to lenders and promoters would "not result in any change in the management or control of the company."

On the post-restructured equity of 7.63-crore equity shares, the public holding would get reduced to 12.63 per cent from the existing level of 44.95 per cent on account of equity reduction and fresh equity offers to promoters and institutions.

PIL is holding an extraordinary general meeting of its equity shareholders here on Thursday to obtain their consent for the fresh equity offerings on a preferential allotment basis in terms of the CDR package approved by the lenders and also in terms of orders of High Court to convert 50 per cent of existing equity into preference shares.

The company informed the shareholders that the lenders - IDBI, ICICI Bank and IFCI - have agreed to restructure Rs 22.85 crore of their loans out of total loans of Rs 214.89 crore as per the CDR package.

In terms of this scheme, the company is required to allot 2.97 crore equity shares of face value of Rs 5 each aggregating Rs 14.85 crore in favour of IDBI, ICICI Bank and IFCI by conversion of part of funded interest term loans. Of this, IDBI would get 1.32-crore shares, ICICI Bank 1.46-crore shares, while IFCI would get 18-lakh shares.

As per the CDR package, the PIL promoters are also required to pump in fresh funds of Rs 15 crore and acquire 3-crore equity shares of Rs 5 each. The company was also directed to allot 1.6-crore cumulative redeemable preference shares of Rs 5 each aggregating Rs 8-crore in favour of the lenders. Of this, IDBI would get 84.8-lakh preference shares, ICICI Bank 66-lakh shares and IFCI 9.2-lakh shares.

This enables the lenders along with mutual funds to acquire 49.34 per cent in the company's preference share capital. While promoters would have 10.5 per cent holding, others including public would have 40.16 per cent.

According to the company, "The proposed issue of shares will strengthen the equity base of the company, afford comfort to the institutions, provide resources to the company to stabilise the operations and improve profitability."

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