JSL to raise $50 mn through QIP by March

JSL to raise $50 mn through QIP by March

New Delhi: JSL Ltd plans to raise $50 million through a placement of shares with qualified investors as part of a debt restructuring deal and will use the proceeds to fund expansion plans, a top official said on Monday.

JSL, which faces a debt burden of Rs6,000 crore, announced last month that a lenders’ panel had approved its proposal for debt recast under the CDR mechanism.

“We will raise money to meet our commitment to the CDR lenders to the extent of $50 million... This will be used for (financing) our phase II of the (stainless steel manufacturing) project (in Orissa)," Arvind Parakh, director for strategy and business development, told Reuters in an interview.

The company will raise another $100 million through sale of shares and bonds in a year, he added.

The company plans to set up a 1 million tonne steel plant in Orissa by March 2012 at a total cost of Rs6,400 crore.

The debt recast will likely be effective from the middle of this year, Parakh said. Under the CDR terms, JSL has received a moratorium on the repayment of Rs1,700 crore debt until March ‘12, Parakh said.

Parakh said JSL’s overall interest cost will immediately rise by 75 bps to about 10% following the recast.

However, it will come down to 8-9% by mid-2013 as lenders convert part of the existing debt into foreign currency loans. Interest cost will start declining from mid-2011, he added.

JSL expects a 15-20% growth in revenue for the current quarter on good demand from railways and industry, but expects prices to remain stable.

Shares in JSL closed up 0.69% at Rs101.90 in a weak Mumbai market.