Financial Daily from THE HINDU group of publications
Sunday, Jun 20, 2004
Money & Banking
Corporate - Preferential Allotments
Max India drops plan to offer equity to ChrysCapital To give fresh holdings to Warburg Pincus, promoters
Hyderabad , June 19
CLOSE on the heels of the private equity fund Warburg Pincus coming forward to pick up 29 per cent equity stake by investing Rs 200 crore in the company, Max India Ltd has decided to drop the earlier proposal of offering equity holding to ChrysCapital.
Warburg Pincus proposes to pick up 10 million equity shares of Rs 10 per share of Max India at an issue price of Rs 200 per share through the preferential route.
This helps Max India raise additional capital as part of its long-term financial plan to support two of its capital-intensive businesses of life insurance and healthcare.
The company has a presence in the life insurance business through its joint venture with New York Life-Max New York Life Insurance and healthcare business.
To meet the funds requirement, Max India had earlier proposed to offer 10.71 per cent stake in the company in favour of ChrysCapital on a preferential basis amounting to Rs 49.82 crore.
It was decided to issue 27.67 lakh equity shares of Rs 10 each at a premium of Rs 170 per share.
The company had also obtained the approval of its shareholders for the proposed equity offer to ChrysCapital on March 12 this year.
In a latest communication, it informed its shareholders that as per the term sheet dated February 12, ChrysCapital and the company were to execute definitive agreements within 75 days and the deadline expired on April 27.
"In view of the inordinate delay in finalisation of the definitive agreements and completion of other legal formalities necessary for consummation of the proposed transaction, including obtaining requisite Government approvals, the company proposes to rescind/cancel the aforesaid issue of equity shares to ChrysCapital II, LLC," the company said.
Meanwhile, the Max India promoters group has decided to pump in funds to the tune of Rs 23 crore by subscribing to 11.5 lakh equity shares at a price of Rs 200 per share on a preferential offer basis.
Accordingly, the company is holding an extraordinary general meeting of its shareholders on June 21 to seek their consent for the proposal of cancelling equity offer to ChrysCapital and offering fresh holding to the promoters group.
Following the preferential offer to Warburg Pincus and the promoters group, the Max India paid-up equity would increase to Rs 34.28 crore from the existing Rs 23.13 crore.
Despite subscribing to 11.5 lakh shares, the holding of the promoters group on the expanded equity would come down to 38.2 per cent from the existing level of 51.63 per cent.
The holdings of institutional investors would come down to 3.07 per cent (4.55 per cent), of private corporate bodies to 2.82 per cent (4.18 per cent), NRIs and OCBs to 7.53 per cent (11.16 per cent) and of the Indian public to 19.21 per cent from the current 28.48 per cent.
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