Siscol to raise Rs 120 cr via pref allotment for debt recast

Chennai, Jan 27 | Updated: Jan 28 2005, 05:30am hrs
Coimbatore-based Southern Iron and Steel Company Ltd (Siscol), which has been recently taken over by Jindal group, is planning to raise Rs 120 crore by way of preferential allotment of equity shares. The fund so raised will be used to finance the on-going corporate debt restructuring programme of the ailing steel maker.

According to the information available with FE, Siscol will raise Rs 120 crore from ICICI Bank and Lakshmi Machine Works Ltd (LMW) by way of preferential allotment of equity shares. The company will be placing nearly 1.3 crore equity shares of Rs 10 each at a premium of Rs 52 with LMW on a preferential basis to rake in Rs 80 crore.

LMW, which originally promoted the venture, had earlier sold close to 40% stake in Siscol to Jindal as part of an ICICI Bank-sponsored CDR package. Similarly, Siscol is also placing nearly 48.4 lakh equity shares on par with a premium of Rs 52 per share with ICICI Bank to raise another Rs 30 crore capital.

The company, last week, got the shareholders nod both for raising its capital base as well as for issuing the shares on a preferential or private placement basis.

The company will also raise another Rs 395 crore from various financial institutions, banks or high networth individuals by way of issuing optionally convertible instruments (OCIs). Siscol is believed to be in talks with a number of FIs, including ICICI Bank and IDBI to raise the funds by issuing OCIs.

Jindals, through their two investment arms Vrindavan Services Pvt Ltd and Jindal South West Group and associates have bought out the LMWs 39.71% stake in Siscol last month.

The buyout was part of Siscols rehabilitation plan prepared by its lenders led by ICICI Bank. The new promoters are in the process of implementing the CDR package to put the ailing steel company back on its heals.