Financial Daily from THE HINDU group of publications
Saturday, Dec 13, 2003
Mergers & Acquisitions
AP Paper Mills stake sold to L.N. Bangur
Hyderabad , Dec. 12
THE Andhra Pradesh Government has sold its 25.36 per cent stake in AP Paper Mills Ltd (APPML) for Rs 39.29 crore at Rs 130.95 per share to Digvijay Investments Ltd (DIL), which already holds 46.73 stake in the company.
An agreement was signed on Friday by the State Government and DIL, which is headed by Mr L.N. Bangur, also the Chairman of APPML.
Speaking to newspersons, Mr Deepak Kumar Panwar, Chairman of the State Implementation Secretariat, said that the purchase price of Rs 130.95 per share was "very fair" and represented a sizable premium over Tuesday's closing price of Rs 112.30 and the yearly high-low average price of Rs 82.25.
The sale price was arrived at after taking into account estimates of value derived through a variety of methods and relevant reference prices.
DIL had originally made an offer of Rs 117. However, the Implementation Secretariat had appointed Capital Fortune and Consultants for overall share valuation, which arrived at the price of Rs 130.95.
DIL agreed to pay the price offered by the State Government on December 5.
The market price on the day immediately preceding the date of offer on December 4 was Rs 111.30. The book value of the share as on March 2003 was Rs 154.
As the sale amounts to `inter se transfer' between two promoters and since the price is not higher than 25 per cent of the high-low average of Rs 108 for the two weeks prior to the offer, it would not trigger any public offer as per SEBI rules, Mr Panwar said.
He added that the Cabinet sub-committee for enterprise reforms and restructuring had decided to give the first opportunity for purchase of its stake to DIL keeping in view its long association with the company and not to give a wrong impression to investors that it would dump its partners at the time of disinvestment.
Mr Y. Ramakrishnudu, Finance Minister and Chairman of the sub-committee, said that the transaction represented a substantial return on the State Government's initial investment in APPML.
Mr Panwar said that there were three other listed companies - Hyderabad Industries Ltd (HIL), Nagarjuna Fertilisers and Chemicals Ltd (NFCL) and Bakelite Hylam - scheduled for disinvestment of Government stake.
Though the Government has less than five per cent stake in these companies, it is finding it hard to get buyers. While the share prices of HIL and NFCL are quite low, Bakelite Hylam has been referred to the BIFR.
So far, the Implementation Secretariat has carried out asset and share transactions valued over Rs 550 crore.
In the past six months, the State Government raised Rs 222 crore from sale of stake in seven companies listed on the stock exchanges.
The other transactions have been by way of asset sales that have led to the turn around of loss-making enterprises in sectors such as sugar milling, distilling and spinning.
The savings to the State Government till now from the enterprise reforms after paying for voluntary retirement schemes and settling other liabilities has been Rs 300 crore per year.
The reduction in State guarantees for loans was Rs 90 crore per year, Mr Panwar added.
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