Financial Daily from THE HINDU group of publications
Tuesday, Dec 27, 2005
Financial Daily from THE HINDU group of publications Tuesday, Dec 27, 2005 |
|
|
|
|
|
|
|
Home Page
-
Open Offers Corporate - Mergers & Acquisitions Tata Chem open offer soon for remaining stake of Brunner Mond — `Funds will be generated internally for the purpose' Our Bureau
Mr Prasad Menon (right), Managing Director, Tata Chemicals Ltd, and Mr Homi Khusrokhan, ED, at a press conference in Mumbai on Monday. — Paul Noronha
Mumbai , Dec. 26 THE combined entity of Tata Chemicals Ltd (TCL) and UK-based Brunner Mond Group (BM) will be the third biggest soda ash manufacturer worldwide with a production capacity of 3 million tonnes. TCL had acquired a 63.5 per cent equity stake in BM last Friday for Rs 508 crore, in a deal advised by Lazard India. It will make an open offer for the remaining equity after the Christmas and New Year holidays. "That will be funded from internal accruals,'' Mr Prasad Menon, Managing Director, TCL, said at a press briefing here. The stake acquired so far has also been funded without any borrowings, the company having used its cash resources including FCCB proceeds, for the purpose. The FCCB funds have almost dried up; $108 million were spent for the BM deal while TCL drew $38 million earlier this year to become an equal partner at Indo Maroc Phosphore SA (IMACID). Company officials said there are no immediate plans to raise funds afresh. The investment in BM is through TCL's 100 per cent subsidiaries in Mauritius (floated at the time of TCL's failed bid for a fertiliser company in Egypt) and the UK. The UK holding company is being funded by TCL through its subsidiary without any recourse to external debt, an official statement said. The current chairman of BM will continue to head the company as a Tata nominee. Mr Menon is also expected to join the board. Like many soda ash companies, BM too had gone into difficult times in the early 1990s. However, it didn't report a loss and even in 2004, its worst year, according to Mr Menon, the company returned a small profit. It had an EBITDA of £15 million on a top line of £180 million. BM has total debt of £50 million, varying in interest rate from 1.5-4.5 per cent above LIBOR. "There will be debt restructuring,'' Mr Menon said. According to him, the soda ash industry is now looking up and BM was picked up at the right time. Soda ash prices are at present in the $190-200/ tonne range, compared to $160-170 last year. Among consuming sectors, demand from the automobile and construction industries has been growing at 6-8 per cent with detergents cruising along at 1.5 per cent. Demand outlook is strong till the Shanghai Expo of 2010, Mr R. Mukundan, Chief Operating Officer (Chemicals Business), TCL, said. Technology, cost leadership and deeper customer relationships are the advantages accruing from BM's acquisition. "One of its strengths is the multiple grades of products,'' Mr Mukundan said of BM's portfolio and what that held to improve margins. Further, BM's natural soda ash obtained by processing `trona' from Kenya's Lake Magadi is said to have the lowest production cost in the world. The deal also gives BM's pharma grade `Bicarb' access to the large Asian market. The pharma grade product sells for as much as $ 500/tonne.
More Stories on : Open Offers | Mergers & Acquisitions
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2005, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|