The Aditya Birla group will infuse Rs 2,600 crore into the country's largest aluminum producer Hindalco by issuing warrants and fresh equity. With this, the promoters holding in the company will increase by 10 per cent to 37.45 per cent. The funds are likely to part-finance the $6-billion (Rs 26,400 crore) Novelis acquisition.
The board of directors of the company on Friday approved a preferential issue to the promoters of 67,500,000 equity shares of Re 1 each amounting to Rs 1,200 crore and 80,000,000 warrants of Re 1 each for Rs 1,400 crore.
The board has convened an extra-ordinary general meeting for the approval of preferential allotment on March 28.
Under the plan, an equity share for the preferential allotment will be priced around Rs 177 and the warrants will be priced around Rs 175. The shares of the company closed at Rs 137.85 on the BSE on Friday.
With the allotment, the promoters holding in the company will increase by 5 per cent to 31.7 per cent. While announcing the acquisition of Novelis, Hindalco managing director Debu Bhattacharya had said the acquisition would be funded through a mix of debt and internal accruals. The company will fund it by a $2.8 billion borrowings from banks and $450 million from Hindalco's internal accruals while another $300 million from one of the group companies.
The cost of the acquisition, including Novelis' debt of $2.4 billion, is $5.9 billion. The deal involves a payment of $3.55 billion in cash to Novelis shareholders, at $44.93 per share. The allotment of shares will ease the debt-equity combination for the acquisition.