Mumbai: India’s top aluminium producer, Hindalco Industries Ltd, has signed five banks to manage a rights share offer for up to $1.2 billion (Rs5,148 crore), three bankers with direct knowledge of the matter said on Thursday.
The offering is crucial for Hindalco to replace a $3.03 billion bridge loan it had taken to buy Canada’s Novelis Inc. in February 2007, and is expected to be launched by October, provided the stock market does not drop further, they said.
Finance plan: Hindalco managing director Debu Bhattacharya. The firm also plans to raise debt and liquidate part of its treasury investments in bonds and other instruments to close a bridge loan it had taken. (Photo: Abhijit Bhatlekar/Bloomberg)
Merrill Lynch and Co. Inc., Deutsche Bank AG, Citigroup Inc., ABN AMRO NV and SBI Capital Markets Ltd are the advisers to the issue, the bankers said. “We have appointed some bankers, but wouldn’t want to name them now,” Hindalco’s chief financial officer, Sunirmal Talukdar, said over telephone.
India’s benchmark Sensex index has fallen more than 36% this year, largely due to weak global sentiment towards equities.
Nine initial public offerings have been deferred and several rights issue have extended their closing dates.
Hindalco may split the total offer into a rights issue of equity shares and convertible preference shares, two bankers involved in the deal said. “The structure is being worked out. A few of us are proposing a combined offer to ensure the deal sails through easily,” said one banker, who did not want to be identified as he was not authorized to speak to the media.
Hindalco also plans to raise debt and liquidate a part of its treasury investments in bonds and other instruments to close the bridge loan from ABN AMRO, Bank of America Corp. and UBS AG, Talukdar said in June while announcing the rights offer.
The bridge loan at 80 basis points over the London Interbank Offered Rate (Libor) expires in November, he said. One basis point is one-hundredth of a percentage point.
Indian Hotels Co. Ltd, a part of India’s Tata group, had extended its rights issue closing date by nine days in April.
ICICI Securities Ltd, a unit of No. 2 lender ICICI Bank Ltd, and UTI Asset Management Co. Ltd, India’s oldest mutual fund, are among firms that had delayed initial public offer plans worth $4.1 billion this year amid poor markets, according to Thomson Reuters data. Share offerings in India have fallen sharply every month since January, when Reliance Power Ltd raised a record $3 billion.
Funds raised through shares in the first six months of 2008 fell 66% from a year earlier to $5.85 billion, the data showed, with equity offerings in the June quarter at $614.9 million, the lowest since the last quarter of 2003.