major and considerably reduce the company's debt.
JISL will merge irrigation business worth ₹4200 crore with Rivulis of which Rs 2,700 crore will be used to repay it's all overseas debt and Rs 200 crore will come to the parent company, a PTI report stated.
The merged entity will "create a global Irrigation and Climate leader - being 2nd largest in the world with $750 million in revenues," according to a stock exchange announcement. While Temasek will hold 78 percent of the merged entity, Jain International Business will have 22 percent.
In a notice, Company Secretary A. V. Ghodgaonkar said, "This transaction once closed will result into substantial reduction in Company’s consolidated debt approximately by 45% (Rs 27 billion approx.) and reduce the interest cost."
The notice also stated that this merger will enable Jain Irrigation to refocus its efforts to grow business in India, while further deleveraging the standalone India balance sheet.
Cash proceeds will be utilised for reduction of consolidated debt of Jain Irrigation by 45 percent, which includes all the restructured overseas bonds to the tune of $225 million and complete debt of overseas operating companies comprising international irrigation business.
Anil Jain, Managing Director of Jain Irrigation, commented, "This will enable us all to address climate change and food security challenges with sustainable solutions and implement the critical knowledge transfer for water efficiency and productivity for growers. We look forward to this value accretive long-term relationship to create meaningful positive impact in the agriculture and food ecosystem.".
Richard Klapholz, Rivulis CEO, added, "Our goal is to ensure that all our customers will continue to be successful and benefit from a broader offering, leading industry brands, expanded manufacturing base and the support of leading irrigation services businesses.".
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