Sajjan Jindal, vice-chairman and MD, JSW Steel, India’s third largest steel manufacturing company, has raised Rs 650 crore in his personal capacity from a clutch of NBFCs, one of which belongs to private equity fund KKR.
Seshagiri Rao, joint MD and Group CFO, told FE, ?The promoters have raised the money in their personal capacity to fund the upfront amount of Rs 530 crore towards warrants issued to them on a preferential basis by JSW Steel.? The sum accounts for 25% of the value of the shares, to be paid upfront.
Earlier this month, JSW Steel said it would raise about Rs 2,100 crore by issue of warrants to promoters on a preferential basis to help bring down the company’s debt. The firm will issue 17.5 million convertible warrants to promoters on a preferential basis at Rs 1,210 each. The approval for issuing warrants to promoters was given by shareholders to the company at its extra-ordinary general meeting held on June 2, 2010.
?The promoters have managed to raise about Rs 650 crore form a consortium of five to six NBFCs lead by KKR,? said Rao. The firm will get 25% of the total amount on the date of allotment of warrants, as per the local regulatory laws, while the remainder is payable on conversion into equity shares.
JSW Steel is highly leveraged and wants to bring it down raising capital as early as possible. Investors have also expressed their concern about JSW’s high debt owing to aggressive expansion plans. JSW had a gross debt of Rs 16,173 crore at the end of March 2010 and a gearing, on consolidated basis, for the of 1.69:1.
JSW Steel shares on Tuesday were up by 1.84% to close at Rs 1,062.90 on the Bombay Stock Exchange.
?We will be repaying an overall amount of Rs 1,500 crore including overseas debt. So net-net , there will be an increase in the net debt of close to Rs 3000-3,300 crore, taking it to about Rs 19,000-20,000 crore by the end of March 2011,? Rao had said earlier.