BSES to raise $200 m through domestic, overseas public issue

Our Corporate Bureau

Mumbai, Aug 8: Power generation and distribution utility BSES plans to raise up to $200 million (Rs 950 crore) via domestic/international issue of securities. The securities will be listed on international or Indian stock exchanges as may be advised by the board, the company said in a notice to its shareholders.

The proposed move comes after BSES reviewed its corporate plan for 2002-20012. The company proposes to raise these funds in one or more tranches. The funds will be used for project development activities, including generation, transmission and distribution projects.

BSES says that the details of the issue will be determined by the board of directors in consultation with merchant bankers, lead managers, advisers and underwriters. The issue price of the securities in the proposed offering will be determined by the board at the time of the offer, depending on the prevailing market conditions. The company may also increase its subscribed share capital by allotment of further shares. The notice adds that the shares shall be offered to the persons who at the date of the offer are holders of the equity shares of the company.

The special resolution seeks the consent of the shareholders authorising the board to make the proposed issue of securities convertible. “In the event it is decided to issue securities convertible into equity shares, to issue the holders of such convertible securities in such manner and such number of equity shares as maybe required to be issued,” it adds. As per the resolution, the pricing of the issue will be a free market pricing and may be at a premium or at a discount of the market price.

The resolution also empowers the board to issue and market any securities issued pursuant to the international offer, including the power to issue such securities in tranches with or without voting rights.

BSES’ move follows its decision to examine opportunities now emerging in the areas of generation projects. BSES has planned a capacity addition of about 9000-MW with an investment outlay of about Rs 10,000 crore over the next 10 years. While the company would continue to pursue projects available through the bidding route, it would also consider acquiring projects from existing developers.

BSES will also raise another Rs 100 crore by issuing redeemable preference shares. The funds will be used for normal capital expenditure and for augmenting long-term resources for working capital. Shareholders’ approval is being sought on this as well.

In the area of power distribution, BSES has planned ownership of six distribution areas with an investment outlay of about Rs 600 crore. The company, in its annual report, says that the initial three to four years are expected to be difficult periods, but these ventures are seen to be profitable in the long run. BSES has also planned ownership of three transmission networks with an investment outlay of Rs 600 crore.