The Birla family’s holding in Kesoram Industries may tumble to 32.39 per cent following the issue of equity and preference shares to Indian lenders according to the terms of the long-pending debt resolution. The promoters now hold 53.13 per cent of the equity.
The company, the flagship of Basant Kumar Birla Group, issued around 2.22 crore shares at Rs 65 a share, to nine Indian banks and one financial institution, converting a Rs 144.43-crore loan into equity. It also issued 4.48 crore zero coupon optionally convertible redeemable preference shares to the same set priced at Rs 100 apiece, converting a loan of Rs 448.97 crore.
There will be a lock-in of one year on the instruments. Assuming that the preference shares are converted into equity, the promoters’ holding will slip. Shares were issued to Axis and ICICI Bank among others. The Kesoram scrip closed at Rs 83.85 on the BSE on Monday.
On top of that, Kesoram plans to raise around Rs 700 crore by issuing optionally convertible debentures (OCDs) to a clutch of investors belonging to Goldman Sachs, Edelweiss and Sarvara Investment among others.
This amount will be used to pay off the existing Indian lenders. The OCDs will not be converted to equity shares unless there is a default on behalf of the company on a specified date. However, if such conversion does take place, the holding of the promoters would decline further to 24.87 per cent.
In the past, the Birla family had poured in money in the company as a form of equity to support the cement manufacturer. If that happens, the promoter holding may go up again.
Manjushree Khaitan, daughter of late B.K. Birla, is chairman. Pilani Investment and Industries Corp and Century Textiles, which are under the effective control of Kumar Mangalam Birla, grandson of BK, and chairman of Aditya Birla Group, held 22.76 per cent in Kesoram before conversion.
The exercise undertaken is part of a one-time settlement agreed by the Indian lenders. Part of the existing Indian lenders’ debt is being converted to equity while the rest is being swapped with money flowing from OCDs. The company hopes the exercise will ease the liquidity crunch and enable it to operate the 7.25 million tonne unit more efficiently.
