Hyderabad-based Rain Commodities Ltd and Rain Calcining Ltd have hired Citigroup Inc. and ICICI Bank Ltd to arrange a $600 million (Rs2,640 crore) loan to fund their purchase of Great Lakes Carbon Income Fund, people involved in the deal said.
The loan will be mainly in US dollars and the two arrangers will invite other banks to join, said the two people who declined to be named before a public announcement. The funds will be partly used to pay for the acquisition of the remaining 74% of New York-based Great Lakes Carbon that the Rain companies don’t already own, and partly for refinancing, the people said.
Rain Commodities, owner of cement plants in India, and Rain Calcining, which owns a calcination and power plant, are spending C$437 million (Rs1,639 crore) on the acquisition that will help them become the world’s biggest producers of calcined petroleum carbon, which is used in smelting aluminium.
N. Jagan Mohan Reddy, director of Rain Commodities, couldn’t be immediately reached for comment. “The acquisition will help them expand the market and reduce their costs,” said Swati Korvi, an analyst at Parag Parikh Financial Advisory Services Ltd in Mumbai.
“The price they are paying is what the market expects them to pay, and they will be able to manage the loan,” she added.
Companies in India borrowed $3.573 billion in loans for acquisitions last year, 8.7 times the $412 million they borrowed in 2005, according to data compiled by Bloomberg.
India’s economy may expand a record 9.2% in the financial year to 31 March, higher than the 9% growth rate the previous year, the Central Statistical Organization said.
Rain offered C$11.60 a unit in cash for the stake that it doesn’t already own in Great Lakes Carbon, which produces 2.4 million tonnes of calcined petroleum per year and has plants in Port Arthur, Texas; Enid, Oklahoma; Baton Rouge, Louisiana; and La Plata, Argentina.
Bank of Montreal’s investment banking unit advised Great Lakes Carbon. The offer must be approved by two-thirds of its unitholders at a meeting in March-end.