Country's largest producer of branded papers JK Paper Ltd plans to raise Rs 250 crore through a rights issue in May, a top company official said on Tuesday.

“We expect SEBI approval in mid-May and hope to raise Rs 250 crore through a rights issue to part finance our Rs 1,650-crore expansion programme,” J K Paper Chief Finance Officer (CFO), Mr V. Kumaraswamy, told PTI here.

The company has filed a Draft Letter of Offer with SEBI and expects to announce ratio and pricing for the issue once the market regulator's approval is received, he said.

JK Paper has taken up expansion project to increase the total installed capacity from 2,40,000 TPA to 3,90,000 TPA at its unit at Rayagada in Orissa.

It is proposed to install a new fibre line with a capacity to produce about 2,15,000 tonnes of pulp a year, set up a new paper machine with a capacity to produce 1,65,000 tonnes of woodfree copy paper a year for manufacturing copier paper and other multi-functional office paper grades and installing a captive power generation facility of 55 MW.

The company has finalised the orders for all major machinery of the project on a fixed price basis and the new plant will be ready by October 2012, Mr Kumaraswamy said.

The capex will be funded through Rs 150 crore of internal accruals, Rs 250 crore of rights issue, Rs 225 crore of FCCB issue and Rs 1,050 crore of debt, he said.

The company is also issuing unsecured unlisted Foreign Currency Convertible Bonds (FCCBs) up to an amount of €35 million (about Rs 225 crore) on a private placement basis.

JK Paper will issue the FCCBs on a private placement basis to three European development finance institutions namely, FMO, DEG and Proparco.

The FCCBs are convertible into equity shares of the company at an initial conversion price of Rs 65/ share. The price represents a premium of 13.5 per cent over the closing price on NSE on April 8.

The FCCBs are redeemable between the fifth and seventh years and are convertible into equity shares anytime after 3.5 years.

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