Financial Daily from THE HINDU group of publications
Tuesday, Jun 25, 2002
Corporate - Restructuring
Mysore Cements shelves plans to sell off 3 plants To issue pref shares to IDBI
BANGALORE, June 24
THE S.K. Birla group company, Mysore Cements Ltd, has shelved its plan to sell off its plants at Jhansi, Damoh and Narsingarh for the time being in the absence of any serious bidders, according to market sources.
Meanwhile, the company plans to issue preferential equity shares to its lender, IDBI. The company, in a recent statement to the Bombay Stock Exchange, said it would seek the board's approval to issue preference shares up to Rs 25 crore to financial institutions, mutual funds, asset management companies and overseas corporate bodies.
"We seek to issue shares to IDBI in order to raise up to Rs 5 crore from the institution," company sources said.
IDBI follows other lenders such as ICICI and IFCI which had picked up equity in the company. However, company sources maintained "this new issue is different as the previous issues tried to convert debt into equity...this is simple preferential allotment".
Meanwhile, commenting on the status of the proposed assets sale, a company official said, "If something had happened, we would have informed the stock exchange." The company had earlier expected to close the deal by April 2001 after deciding on the sell-off in June 2000 and mandated ICICI Securities to scout for possible buyers. A slowing domestic economy hindered the sell-off plan as investors preferred to sit on the sidelines awaiting a clear signal of economic revival, analysts said.
"There seems to be no serious feelers to take over the plants," a cement analyst with a domestic brokerage said.
Burdened with debt and operating losses, Mysore Cements decided on the sell-off. There were talks that Blue Circle was interested in the plants, but discussions fell through in August 2000 over pricing issues.
Another foreign cement major, Nesher of Israel, evinced interest in taking over the plants early this year, market sources said. Currently, Nesher holds minority equity stake in Mysore Cements. However, talks with Nesher also did not yield fruits, the sources added.
Zuari Cements, which shifted its office to Bangalore recently, denied interest in buying Mysore Cements' assets. "Once we looked into it, but now we have taken it off our drawing board," the Managing Director, Mr H.S. Bawa, had told Business Line. Italicementi, which is an equal joint venture partner in Zuari Cements, also ruled out the possibility of venturing into the central Indian market through buying out Mysore Cements' assets.
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