Aban Offshore QIP to close today, 13% equity dilution seen

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Aban Offshore QIP to close today, 13% equity dilution seen

Aban Offshore's qualified institutional placement (QIP) which opened on Friday will close today. The company is looking to raise a maximum of Rs 1,000 crore, sources indicate that an equity dilution of nearly 13 percent pre-issue capital is likely.

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Excerpts from Power Breakfast on CNBC-TV18 Watch the full show » RELATED NEWS Hold Aban Offshore: Mohindar Aban Offshore BSE | NSE 31/05/12 Are Mutual Funds betting on Aban Offshore?

Aban Offshore's qualified institutional placement (QIP) which opened on Friday will close today. The company is looking to raise a maximum of Rs 1,000 crore, sources indicate that an equity dilution of nearly 13 percent pre-issue capital is likely. Most of the capital will be used to pay off the debt.

Below is a verbatim transcript of Gautam Broker's comments on CNBC-TV18. Also watch the accompanying video.

Aban had made an announcement on Friday saying that the QIP book is open at a price of about Rs 1224.28, which is about Rs 12 discount to the Friday's closing price of Rs 1236.

The company is looking to raise maximum of about Rs 1,000 crore via the issue. The preliminary placement document says that 17 of their 20 rigs are under contract as on September 30. The total outstanding debt as on March 31 was about Rs 16,635 crore. The substantial portion of the cash flow and the money raised from the issue is likely to go into a repayment of debt. The total contract drilling services backlog is about 2.371 billion as on September 30. At 09:56 am, the share was quoting at Rs 1,263, up Rs 28.25, or 2.29%.

The management indicates that their contracts will suffice to pay the debt. The company is looking to raise about USD 100 million with an upsize of USD 50 million. This is about Rs 700 crore, a 13.1% pre-capital dilution and 9.1% of the post issue capital. The book closes premarket on Monday. It is oversubscribed and the company has successfully raised about USD 150 million.