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Singapore-based agri-business group Wilmar International will pick up a 27.5 per cent stake in Shree Renuka Sugars for ₹517 crore. This will be through a preferential allotment of 257.5 million shares of fresh equity at ₹20.08 a share. Wilmar will invest a total of $200 million (about ₹1,240 crore) in the Mumbai-based Shree Renuka Sugars.
The deal, announced after market hours, has been struck through Wilmar’s wholly-owned subsidiary Wilmar Sugar Holdings in a two-step process.
Wilmar will also make an open offer for a maximum of 243.1 million shares or 26 per cent stake in Renuka Sugars at ₹21.89 a share, according to a statement from Renuka Sugars. The company’s shares closed nearly 4 per cent up on the BSE on Thursday at ₹22.50.
Rights issue The second step would involve Wilmar and existing promoters jointly participating in a rights issue to raise up to ₹725.4 crore of equity capital. Both Wilmar and the existing promoters of Shree Renuka would jointly control the company and have equal shareholding and board representation in accordance to the joint venture agreement signed.
The proceeds would be used to retire Shree Renuka’s debt in India. The investment is subject to shareholder and regulatory approval in India and Brazil.
Narendra Murkumbi, Vice-Chairman and Managing Director of Shree Renuka Sugars, said: “This is a path-breaking move in the sugar business which would create a very strong partnership in some of the key global markets for sugar. Wilmar’s leadership position in the edible oil business globally and its strong reach in several countries across the world would be synergistic with our large footprint in India and Brazil, the two largest sugar producers in the world.”
Kuok Khoon Hong, Chairman and CEO of Wilmar, said, “India is a very important market for Wilmar. Besides the benefit for our sugar business, this venture will complement the development of our edible oils and other businesses in India.”
Q3 performance In the third quarter of this financial year, Renuka Sugars reported a standalone loss of ₹193 crore on sales of ₹1,195 crore. In a conference call with analysts after the first quarter results, the company put its total debt at ₹7,500 crore.
Renuka Sugars has a total capacity of 20.7 million tonnes, of which 7.1 million tonnes are in India and 13.6 million tonnes in Brazil. Renuka Sugars acquired the Brazil unit in March 2010.
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