The Hindu Business Line : BILT undertakes recast

Pointers
The reorganisation will be effected through a ‘slump exchange’ via a court scheme.
Post buyback the total share capital of BILT will fall from Rs 18.61 cr to Rs 10.71 cr.

Our Bureau

New Delhi, July 24

Ballarpur Industries Ltd (BILT) on Tuesday announced a scheme of arrangement and reorganisation whereby the company will hive off three of its manufacturing units into a wholly owned subsidiary, BILT Graphic Paper Products Ltd (BGPPL).

The units are Bhigwan, Ballarpur and Kamalapuram, and the reorganisation by the company’s board of directors will be effected through a ‘slump exchange’ via a court scheme.

The consideration for the transfer would be Rs 1,950 crore and will be done through the issue of shares worth Rs 450 crore, and non-convertible debentures of Rs 1,500 crore by BGPPL to BILT.

Raising money

The requisite money will, however, be raised by Ballarpur Paper Holdings BV (BPH), within 40 days from the date of court approval, through long-term debt and sale of equity, as BGPPL and Sabah Forest Industries Malaysia (SFI), both, will be wholly owned subsidiaries of the firm. BPH, incorporated in Netherlands, is a 100 per cent subsidiary of Ballarpur International Holdings BV (BIH), which is an 80 per cent subsidiary of BILT.

The remaining 20 per cent in BIH is beneficially held by JP Morgan. BPH was formed in an attempt to facilitate the acquisition of SFI in 2006 by BILT.

“At BILT, we realised the importance of having a structure like that of BPH during the Sabah acquisition. The objective is to create a structure more competitive than BILT to unlock value and correct capital structure, in order to make it easier for us during acquisitions, which we are always in the look out for,” said Mr B. Hariharan, Group Finance Director, BILT.

Buying back

BILT, meanwhile, will use approximately Rs 940 crore of the total amount received as part of the acquisition, to compulsorily buy-back 40 per cent equity shares from all shareholders on a mandatory basis. The buy-back has been fixed by the Board of Directors of BILT at Rs 125 per share. The remaining Rs 1,010 crore will be utilised to clear debt worth Rs 1,450 crore.

Before effecting the buyback, BILT, will split the shares into 5 shares of face value of Rs 2. The buy-back will be effected for 2 shares of face value of Rs 2 at a price of Rs 25 per share.

In the interest of small shareholders owning up to 1,000 shares (pre-split) and 5,000 shares (post split), who opt to offer the entirety of their shareholding, the residual of the 60 per cent of the shares will be bought back at Rs 30 per share of face value of Rs 2 per share (post split). In fact, post buy back the total share capital of BILT will come down from Rs 18.61 crore to Rs 10.71 crore.

“The buyback of share in no way will affect the current positioning of our current shareholders,” said Mr Hariharan.

Related Stories:
BILT: Growing aggressively

More Stories on : Restructuring | Buyback | Paper | rd & Newsprint

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page