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Chemplast Sanmar Ltd has said that the floor price for the equity shares of the company has been fixed at Rs 4.51 per equity share. This is for buy back of the company's share by its parent, Sanmar Holdings, and the voluntary delisting of the equity shares. The bid opens on April 12 and closes on April 18.
The company's paid-up equity share capital comprises of 7.99 crore fully paid-up equity shares having face value of Re 1 each.
Sanmar together with other promoter entities, currently hold 75 per cent of paid-up capital of the company. The promoters plan to acquire the rest 25 per cent of the shares from the public. The company had in January announced the intention to buy back the shares. This will give an option for the promoters to raise equity resources freely from promoters and others towards reorganising the company.
Company announcement
Chemplast manufactures products such as PVC resins, caustic soda, chlorochemicals, refrigerant gas, industrial salt and PVC piping systems. Its manufacturing units are located in Mettur, Panruti, Cuddalore, Vedaranyam and Ponneri in Tamil Nadu. It also has units in Shinoli in Maharashtra and Karaikal in Puducherry.
As on March 31, 2011, the company's net worth was Rs 174 crore. This has significantly affected the gearing of the company with the debt to equity ratio at 6:1. Chemplast has also liquidity problems to overcome, for which the promoters are extending unsecured loans.
With promoter holding being 75 per cent and the institutional holding at around six per cent, there has been no trading liquidity in the stocks.
The company needs to be reorganised and raise equity funds to correct the situation, which it currently faces. It would take some more years before Chemplast is able to recoup the losses that it has incurred in the past few years.
Chemplast needs capital infusion to correct the gearing and liquidity issues, which the promoters are willing to support, the announcement said.
On Firday, the company's share price closed at Rs 6.46, down by 1.07 per cent over last day's closing price on the BSE.
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