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ICICI Bank takes 5.6% stake in Andhra Cements

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JP Morgan plans to pick up stake fall through

Nilanjan Dey
Kohinoor Mandal

Kolkata, May 26

J.P. Morgan's attempt to invest in Andhra Cements, the sick company in the G.P. Goenka group, has fallen flat. ICICI Bank will now replace the international investment major, courtesy a 5.6 per cent stake in the cement manufacturer.

In a deal involving Rs 50 crore Rs 10 crore in equity plus Rs 40 crore in term loans the bank has decided to take roughly 66.18 lakh shares of the company. The funds are likely to be disbursed shortly on the strength of a sanction letter dated May 18.

Andhra Cements, which will have a post-issue equity base of Rs 117 crore, will also see the promoters bring in Rs 30 crore as part of the overall deal. The company's Indian promoters, incidentally, held 71.6 per cent of the equity (as on March 31).

"The transaction will be at a premium, which will be the same for both the promoters and ICICI Bank," maintained sources close to the development. They did not spell out the exact reason why J.P. Morgan's attempt to participate in the company's equity was unsuccessful.

J.P. Morgan had proposed to bring in about Rs 73 crore by way of equity and debt through Silver Peak Investments, a Mauritius-based arm of one of its affiliates. A major part of the package Rs 49 crore was to come through a five-year paper bearing 12 per cent interest.

Rehab scheme

The Andhra Cements board, sources mention, had in a meeting held recently considered the proposal on fund infusion as part of a rehab scheme approved by the Appellate Authority for Industrial and Financial Reconstruction.

On the BSE, the stock on Friday closed at Rs 34.75, marginally higher against Friday's close of Rs 34.45. Trading volumes were at 42,740 shares.

As much as 52.73 per cent of the company's equity is currently held by Boydell Media Pvt Ltd, while three relatively better-known G.P. Goenka group outfits (Star Paper Mills, NRC Ltd and Stone India) hold smaller stakes. Fidelity Capital Investment Inc, with about 13 per cent, represents foreign shareholders. Roughly 9.34 per cent was held by the Indian public as on March 31.

(This article was published in the Business Line print edition dated May 27, 2006)
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