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As part of its corporate restructuring initiative, Delhi-based flexible packaging company Uflex Ltd on Friday transferred 75 per cent shareholding in its American unit, Flex Films (USA) Inc, to wholly-owned Flex Middle East FZE, Dubai.
According to R.K. Jain, Group President, the remaining 25 per cent stake will also be transferred this fiscal.
The transaction, aimed at converting Flex Middle East into a holding company for overseas operations spread over Dubai, Egypt, Poland, Mexico and the US, may fetch nearly $35 million (Rs 220 crore) to Uflex.
Polish and Egyptian operations are already held by Flex Middle East.
The Kentucky-based US-arm manufactures 30,000 tonnes of plastic films annually. To complete the restructuring, Uflex will next transfer the shareholding in Flex Americas S.A. de C.V, Mexico to the Dubai arm. The transaction is expected to be over in six to seven months.
Mexico next
“The valuation of the Mexican arm is currently on. Preliminary estimates suggest that the transfer of shareholding in the US and Mexico (units) together may fetch $80-100 million,” Jain said.
Uflex will utilise the proceeds in retiring part of its debt and financing future expansion in India.
Excluding working capital finance, the company now has a total debt of Rs 1,740 crore against a consolidated turnover of nearly Rs 5,161 crore. The debt-equity is 0.6:1.
Dubai arm listing
But before Uflex transfers stake in Mexican operations to the Dubai arm, Flex Middle East has to raise finances, preferably equity finances, through listing, to complete the transaction. The Dubai-based company may also utilise the opportunity to raise adequate finance to fund the overseas capacity expansion plan of Uflex.
“Various options, including equity and quasi-equity (a mixture of debt and equity), are available before Flex Middle East for fund-raising. We are yet to discuss the possibilities. There are regulatory issues involved with regard to transfer of stake and bringing the proceeds to India. Overall, we are expecting to complete the entire process (fund-raising by the Dubai arm and converting it into a holding company for overseas business) in six to seven months,” Jain said.
pratim.bose@thehindu.co.in
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