Financial Daily from THE HINDU group of publications
Tuesday, Mar 21, 2006
Financial Daily from THE HINDU group of publications Tuesday, Mar 21, 2006 |
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Markets
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Foreign Institutional Investors Corporate - Restructuring Industry & Economy - Cement JP Morgan investing in Andhra Cements
Kohinoor Mandal
Kolkata , March 20 Global finance major JP Morgan is investing Rs 73 crore by way of debt and equity in the ailing G.P. Goenka Group outfit, Andhra Cements Ltd. The size of the equity has been pegged at Rs 24 crore and it would be invested through one of its Mauritius-based investment companies. JP Morgan is also paying a premium for the equity. The balance — Rs 49 crore — would be made through a five-year-old debt paper carrying an interest rate of 12 per cent. Sources said that on Monday JP Morgan has applied to the Reserve Bank of India for the necessary clearances under the existing foreign exchange regulations. "The clearance from the apex bank is expected soon, and subsequently, the deal would be completed," sources said. JP Morgan and Andhra Cement had been negotiating over this arrangement for almost six months. In fact, at an extra-ordinary general meeting (EGM) held on March 18, shareholders of Andhra Cements approved the expansion of the authorised capital to Rs 115 crore from Rs 70 crore. In mid-February this year, JP Morgan and Andhra Cement signed an informal memorandum of understanding. A broad-based agreement among the two is likely to be signed soon. Around the same time, AAIFR (Appellate Authority on Industrial & Financial Reconstruction) has also approved JP Morgan's investment proposal. As Andhra Cements is the BIFR (Board for Industrial & Financial Reconstruction) net, this approval was necessary. Talking to Business Line Mr G.P. Goenka said that an investor — and not another cement producer — is likely to be roped in. It is likely to happen "fairly soon" and may be "within this month-end." "I will not tell anything more than that because a deal is not complete unit the two parties sign on the dotted lines. Moreover, I would have to inform the stock exchanges before anyone else," Mr Goenka said. He said that his holding in the company is above 84 per cent and he would not mind hiving a portion of it to an investor. For the year ended March 31, 2005, Andhra Cements registered a turnover of Rs 155.99 crore and a nominal net profit of Rs 2.41 crore. As on that date its total accumulated losses were Rs 257.87 crore. Approximately three lakh shares of Andhra Cements were traded at the BSE on Monday. However, the stock hardly moved up. It opened at Rs 36.80, reached a high of Rs 38.60 and finally closed at Rs 36.90.
More Stories on : Foreign Institutional Investors | Restructuring | Cement
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