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Bhushan Steel Ltd will seek shareholder approval to raise around ₹6,000 crore ($1 billion) through a securities issue, after a consortium of bankers advised the company on Monday to bring in equity.
The company informed the National Stock Exchange that the matter will be put to vote at its annual general meeting, to be held on September 20. A spokesperson for the steelmaker said the decision is based on the advice of the consortium of bankers, which has a combined exposure of about ₹40,000 crore to the Bhushan Group.
The company plans to raise the money by issuing redeemable cumulative preference shares. Money raised through such an instrument is added to the company’s equity, and when it is in a position to pay the cumulative dividend, investors in the instrument are repaid, leaving the equity shareholding unaltered. As on March 31, 2014, Bhushan Steel’s share capital was ₹149.03 crore. Its assets totalled ₹51,110 crore and liabilities amounted to ₹41,915 crore.
The consortium of banks had asked the company to bring in equity and sell non-core assets.
On Tuesday, Bhushan Steel shares closed at ₹144.90 on the BSE, nearly 5 per cent lower than their previous close.
Going by Tuesday’s share price, the promoters’ shareholding in the company is worth ₹2,340.03 crore.
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