In a major restructuring, Ballarpur Industries (BILT) will transfer ownership of its three units at Bhigwan, Ballarpur and Kamalapuram to an overseas subsidiary for Rs 1,950 crore. The company will use the cash to buy back of 40 per cent of its own equity at Rs 125 a share, thereby reducing its paid-up capital to Rs 107.1 crore from Rs 186.1 crore.
The aim was to create a large asset base company overseas, which would eventually use its equity for acquiring other foreign companies, said B Hariharan, group finance director, BILT.
The company has formed a subsidiary, Ballarpur International Holdings BV, in the Netherlands with JP Morgan, which holds 20 per cent in it. Ballarpur International, through another subsidiary, Ballarpur Paper Holdings BV, also in the Netherlands, had acquired 97.7 per cent of Sabah Forest Industries Malaysia for $269 million earlier this year.
Hariharan said Ballarpur Paper Holdings would divest around 15 per cent stake to finance the restructuring. Ballarpur Paper Holdings would be the main holding company, he added. It will raise between $150 million and $200 million through a private placement of equity to global investors and long-term debt to fund the asset transfer from Ballarpur Industries.
The three units to be hived off will be transferred to a wholly owned subsidiary called BILT Graphic Paper Products Ltd for Rs 1,950 crore, to be paid in stock worth Rs 450 crore and non-convertible debentures of Rs 1,500 crore. Ballarpur Industries will transfer these shares and debentures to Ballarpur Paper Holdings.
Of the Rs 1,950 crore, Ballarpur Industries will use Rs 940 crore to compulsorily buy back 40 per cent of its equity at Rs 125 a share.