The country’s largest paper manufacturer, Ballarpur Industries Ltd (Bilt) on Tuesday said that it will hive off its three manufacturing units at Bhigwan, Ballarpur (Maharashtra) and Kamalpuram (Andhra Pradesh) into a wholly-owned subsidiary Bilt Graphic Paper Products Ltd (BGGPL) in a process to offset debts of Rs 1,450 crore, raised while acquiring Sabah Forest Industries, Malaysia (SFI). The transfer of the three units would be done at Rs 1,950 crore. BGPPL would issue shares worth Rs 450 crore and non-convertible debentures worth Rs 1,500 crore to Bilt, group finance director B Hariharan said.
Within 40 days of court approval Bilt would then transfer the three units to Ballarpur Paper Holdings BV (BPH) in the Netherlands. BPH is a 100% subsidiary of Ballarpur International Holdings BV (BIH) and was incorporated to acquire Sabah forest Industries Malaysia (SFI). Bilt owns 80% in BIH while JP Morgan owns the remaining 20%.
BPH would raise long-term debt and private equity to the tune of Rs 1,950 crore to fund the SFI acquisition, Hariharan said adding that BPH could go for 20% equity dilution. Of the raised money, Bilt would use Rs 940 crore to buy back 40% of the equity shares from all shareholders on a mandatory basis at Rs 125 per share. Balance Rs 1,010 crore would be used to offset its debts totalling Rs 1,450 crore. The share capital of the company post buy back will be reduced to 10.71 crore shares from 18.61 crore post buy back. Both the stock split and the buyback shall be undertaken, only if the scheme is approved and sanctioned by the High Court.
When asked what would the investors get, Hariharan said they would get the cash on buy back and their holdings on a consolidated basis would remain the same. He said before buy back Bilt would split the shares into five shares of face value of Rs 2 and the buy back would be for two shares of face value of Rs 2 at a price of Rs 25 per share.