Financial Daily from THE HINDU group of publications
Wednesday, May 15, 2002
Financial Daily from THE HINDU group of publications Wednesday, May 15, 2002 |
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Policy Industry & Economy - Disinvestment Corporate - Rights Issues Suzuki to take wheel at Maruti: Rights issue at Rs 3,280 a share Our Bureau
NEW DELHI, May 14 IN a landmark decision, the Centre today decided to hand over management control in Maruti Udyog Ltd (MUL) to Suzuki Motor Corporation (SMC) for a consideration of Rs 1,000 crore. SMC would acquire controlling stake in the country's leading car manufacturer by way of the Centre renouncing its subscription to a Rs 400-crore rights issue of MUL. Once the rights issue is completed, SMC would end up having a 54.20 per cent stake in the company, with the Centre's share falling to 45.54 per cent. The Centre currently holds 49.76 per cent equity in Maruti, with SMC holding 50 per cent and the remaining 0.24 per cent being held by an employees trust. Briefing newspersons after a meeting of the Cabinet Committee on Disinvestment here today, the Disinvestment Minister, Mr Arun Shourie, said that the Rs 400-crore rights issue would be in the form of 12,19,512 shares of Rs 100 each being sold at Rs 3,280 per share. Suzuki will be subscribing to the entire issue and pay Rs 1,000 crore as control premium to the Centre, he added. The CCD also cleared a two-stage process of disinvestment of the Centre's stake in MUL, with the second stage involving the sale of the Centre's existing shares (post-rights issue) through a public issue. The revised joint venture agreement between Suzuki and the Centre envisages that the latter would sell its existing shares in the domestic market with the participation of Indian and global investors as permitted by law after the completion of the rights issue transaction. Suzuki has decided to underwrite the first public issue of about 36 lakh shares held by Centre at a price of Rs 2,300 per share. For the balance shares, the Centre can exercise a put option at a discount of 15 per cent and or 10 per cent of the average market price. The put option can be availed up to April 30, 2004 at the book value now (Rs 2000) or then, whichever is higher.
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