ICICI buys 40% in Arvind arm
ENS ECONOMIC BUREAU

MUMBAI, DEC 21: The term-lending institution ICICI Ltd is investing Rs 100 crore to pick up a 40% stake in the garments business of denim and cotton textiles maker Arvind Mills, an Arvind spokesman said.

The garments business of Arvind Mills currently operates as a division of the firm, which is proposed to be spun off as a new company, Arvind Brands Ltd, the spokesman said. "The transfer of all assets of the garments division of Arvind Mills to Arvind Brands Ltd will be effective December 31, 1999," he said.

Arvind Mills said in September it has decided to spin off its garments and telecom businesses into two subsidiaries and planned to offer up to 49% equity to private equity funds or strategic investors. The divestment was aimed at helping Arvind raise cash and tide over a liquidity crunch caused by a downturn in its denim business.

The announcement was made after market hours. Arvind Mills shares gained Rs 1.05 to Rs 24.50 on the Bombay exchange. Shares of ICICI, the only Indian financial servicesfirm listed on a US exchange, ended Rs 0.75 down at Rs 109.25. ICICI's American Depository Shares ended Monday at $15.13 on the New York Stock Exchange.

ICICI may pick up 40 per cent stake in the proposed garment company of Lalbhai flagship Arvind Mills Ltd by converting its optionally convertible debentures (OCDs) of Rs 100 crore, sanctioned recently. The five-year debt instrument, to be matured in 2005, carries a coupon of 17 per cent.

"We have not yet disbursed the money meant for Arvind's new venture. The brand business has tremendous upside and we want to keep a right on the upside. If we decide to convert the entire exposure into equity it will work out to 40 per cent stake in the new company," a source in ICICI said.

Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.