NEW DELHI, January 29: The Foreign Investment Promotion Board (FIPB) has cleared Ballarpur Industries Ltd's proposal to give a 16.7 per cent stake to AL Murjan Trading & Industrial Company Ltd of Saudi Arabia.The Thapars are expanding the equity base of the company from Rs 50 crore to Rs 60 crore to allot one crore equity shares to the Jeddah-based company at a premium of Rs 80 per share.
AL Murjan is also picking up 45 lakh preference shares with a face value of Rs 100 per share. A nominee of the overseas company will also be taken on the board of BILT.
The allotment of equity shares and preference shares will help BILT raise Rs 135 crore. Sources in BILT said that the Thapars and financial institutions are not divesting any stake in the company. The Saudi Arabian company will be allotted fresh shares.
BILT is holding an extra-ordinary general meeting (EGM) on February 6 at Ballarpur to get shareholders' approval for allotment of 16.7 per cent stake as well as preferThe preference share issue is anine-year float with an annual dividend of eight per cent.
The equity expansion and proposal to induct AL Murjan forms part of the restructuring plan worked out by Price Waterhouse and the Delhi-based Dimensions.
The flagship of the LM Thapar group had, late last year, announced its decision to split into three sharply focussed companies -- Bilt Paper, Bilt Chemicals and Bilt Investment. The company had also at that stage decided to induct professional talent to look after day-to-day operations of the three companies. At this stage, it is not known whether the foreign investor will hold stake in all three companies or only in one of them once the restructuring exercise is complete.
In keeping with the restructuring programme that has been in place for almost two years now, BILT had also pulled out of its joint venture with Owens. The fresh infusion of funds is expected to enable BILT to retire some of its high cost debt. The company had raised funds from various sources such as private placementdebentures, with interest rates varying between 14 per cent and 19.5 per cent.
In 1996-97 alone, the company had placed Rs 50 crore worth of secured redeemable non-convertible debentures carrying interest rate of 19.5 per cent with financial institutions. It had also placed 18 per cent secured redeemable NCD with the public to raise Rs 18 crore.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
