Kesoram Industries to hive off rayon and transparent paper business

Our Bureau Kolkata | Updated on January 20, 2018

Kesoram Industries Ltd has decided to hive off the company’s rayon and transparent paper business into wholly owned subsidiary for a consideration “not lower than Rs 480 crore”.

In a statement to the stock exchanges, the company said on Saturday that the board took the decision on the disposal and transfer of the business.

It said the business division would disposed off and transferred to an unlisted entity called Cygnet Industries Ltd, which is currently “an unrelated” entity.

However, this entity would offer whole of its equity share to Kesoram worth “not exceeding Rs 50 crore”. Cygnet would pay the balance amount in cash to Kesoram.

SBI Capital Markets did the valuation of the rayon undertaking of Kesoram.

According to market sources, through this deal Kesoram would get free cash flow worth around Rs 430 crore, which would be raised by unlisted Cygnet through borrowing from banks.

The transfer of business would be effective from close of business on March 31.

Kesoram further said, “it is expected that the transaction will be cosummated within 30th June, 2016”.

The transaction would require approval from Kesoram’s shareholders, which would sought through a postal ballot.

Kesoram stock closed on Friday at Rs 103.25 on BSE.

Published on March 26, 2016

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