US-based private equity giant Blackstone has agreed to acquire a majority stake from promoters in Ashok Goel-led speciality packaging firm Essel Propack, leaving the promoters with about Rs 2,157 crore in additional cash. Blackstone has agreed to pay Rs 134 per share to the promoters to buy a 51% stake in Essel Propack. The promoter and promoter group holds 57.03% as on March 31st 2019. Billionaire businessman Subhash Chandra’s brother Ashok Kumar Goel is the single-largest shareholder in the company with about 57% stake. Blackstone said that it will initially buy 51% from Ashok Goel Trust at Rs 134 per share and will further go for an open offer in a bid to acquire an additional 26% stake in the firm at Rs 139.19 per share.
Ashok Goel on Tuesday clarified that the amount raised from the deal will not be used by Zee group promoter Subhash Chandra to pay back lenders, he said to CNBC TV18. He also said that Ashok Goel Trust is not financially or commercially a part of the Essel Group. “If you talk as a family, we are one single family, we are a strong family and we care about each other. But there is no financial or commercial relationship with each other and there is no cross-holding whatsoever,” Ashok Goel said.
Essel Propack is involved in the business of manufacturing laminated plastic tubes, extruded laminated plastic tubes, caps & closures and flexible laminates used in packaging of oral care products, cosmetics, food and pharmaceuticals. The major customers in India include Dabur, Baba Ramdev-led Patanjali (oral care); Godrej, Emami, Vicco, Marico (skincare), Sun Pharma, Dr Reddy’s and Piramal.
Blackstone will also make an open offer for 26% additional stake in Essel Propack for Rs 139.19 per share. Therefore, based on the open offer subscription, the purchase price consideration will vary between Rs 2,157 crore and Rs 3,211 crore (or, approximately $310-462 million). The sale is expected to complete in the coming months, subject to customary closing conditions and approvals, Essel Propack said in a media release.
Subhash Chandra, the founder of Essel group and celebrated Zee media group, has recently found himself in some trouble over his promoter entities being unable to pay back loans to creditors. Earlier, in January, a group of creditors to Subhash Chandra-led promoter entities got together and gave him a moratorium on loan repayments up to September 2019.
Meanwhile, two major mutual fund houses in the country — Kotak MF and HDFC MF — had their fixed maturity plans come to an end, with exposure to debt securities in Subhash Chandra’s companies. Kotak MF offered part repayment to its investors, holding back the amount invested in Subhash Chandra companies, while HDFC MF offered to roll over the plan on maturity. Subhash Chandra had promised to arrange money by the end of September moratorium by selling group assets and pay the lenders their dues.
- First published on http://www.financialexpress.com on Monday, 22 April 2019; updated with Ashok Goel’s comments