Wilmar International’s subsidiary Wilmar Sugar Holdings (WSH) is paying USD 200 million to Shree Renuka Sugars (SRS) to jointly control the company.
The deal, subject to necessary approvals, will be done in two steps, a Wilmar release said on Thursday.
Wilmar said the first step will involve an investment of Rs 5,170 million (approximately USD 83 million) by WSH in Shree Renuka through a preferential allotment of 25.7 crore preferential shares at a price of Rs 20.08 per share. After the preferential issue, WSH will hold 27.5 percent of SRS’ expanded equity share capital.
"As per Sebi guidelines, there will also be an open offer by WSH and the existing promoters (Narendra Murkumbi and his affiliates), as a consequence of the proposed transaction, for up to 26 percent of the expanded equity share capital of SRS at a price of Rs 21.89 per share,” the company statement said.
In the second step, WSH and existing promoters of Shree Renuka will jointly participate in a rights issue to raise up to a further Rs 725.4 crore via rights issue.
Interestingly, the preferential issue for the deal has been announced at a 10 percent discount and open offer at a 2.3 percent discount to the current market price of Shree Renuka Sugars at Rs 22.40 per share.
CNBC-TV18 was the first to report the story on December 3, 2013.
Under the terms of a joint venture agreement, SRS will be jointly controlled by the existing promoters and WSH, with both parties holding equal shareholding and board representation in SRS. The existing promoters will continue with the management of the company, with Wilmar being actively involved in strategic decisions, said the company report.
“The proceeds of this fund-raising will be used by SRS to pay down its existing debt in India,” the company release said, adding that WSH’s funding for the acquisition will be from internal sources and bank borrowings.
Narendra Murkumbi, VC and MD of SRS, said: “This is a path-breaking move in the sugar business which would create a very strong partnership in some of the key global markets for sugar. Wilmar’s leadership position in the edible oil business globally, and its strong reach in several countries across the world, would be synergistic with our large footprint in India and Brazil, the two largest sugar producers in the world. Wilmar’s trading expertise, strong financial strength and history of entrepreneurial growth makes it an ideal partner.”
“We are very pleased to be partnering with Mrs Vidya Murkumbi and Mr Narendra Murkumbi. India is a very important market for Wilmar. Besides the benefit for our sugar business, this venture will complement the development of our edible oils and other businesses in India,” said Kuok Khoon Hong, Chairman and CEO of Wilmar.
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