| Mittal company to announce open offer tomorrow at Rs 120/share. |
The Director, Commercial, Uttam Galva Steels Ltd, Mr Ankit Miglani, addressing a press conference in Mumbai on Saturday.
Our Bureau
Mumbai, Sept. 5 The Mumbai-based secondary steelmaker Uttam Galva Steels, which signed an agreement to divest 5.6 per cent stake to ArcelorMittal Netherlands BV, has left options open for the LN Mittal-owned company to hike its stake later.
Mr Ankit Miglani, Director, Commercial, Uttam Galva, said, “As of now, our intention is to make ArcelorMittal an equal partner. However, the options are open for it (ArcelorMittal) to raise its stake at a later stage.”
The promoters of Uttam Galva, Mr R.K. Miglani and Associates, on Friday signed a co-promotion agreement with ArcelorMittal to sell 5.6 per cent of their 45.6 per cent holding for about Rs 80 crore.
Following the deal, ArcelorMittal will announce an open offer on Monday to acquire 29.39 per cent at Rs 120 a share.
The transaction value for 35 per cent stake to be acquired by ArcelorMittal works out to Rs 500 crore, which translates into an estimated enterprise value of Rs 2,800 crore.
On Friday, Uttam Galva’s Rs 10 shares closed at Rs 113.95, a 10 per cent rise over the previous day’s close.
ArcelorMittal’s offer of Rs 120 a share represents a 27 per cent premium over the two-week volume weighted average and 85 per cent over the six-month volume weighted average, ArcelorMittal said in a press release on its web site.
The release quoted Mr Sudhir Maheshwari, Member of the Group Management Board of ArcelorMittal, as saying that the transaction would provide ArcelorMittal with its first major manufacturing presence in India.
ArcelorMittal’s plans for greenfield steel plants in India, with a total capacity of 12 million tonnes, in Jharkhand and Orissa, have been put off due to delays in acquiring land and allotment of mine, as also by the global economic slowdown.
“In the event of the open offer being under-subscribed, the promoters group will offload more stake to ArcelorMittal to ensure that the relative shareholding of both co-promoters are equal,” Mr Miglani said at a press conference here on Saturday.
ArcelorMittal and Uttam Galva will have three board members each, besides six independent directors.
“There will not be any management change but we will try to adopt the best practices followed by ArcelorMittal. We will also benefit from the technology transfer,” he added.
Uttam Galva’s promoters, who raised money earlier by pledging shares with two financial institutions, will soon release the pledge as they plan to pay back the balance five to 10 per cent of the loan amount, Mr Miglani said. There were no details on the names of the FIs concerned or the amount involved.
The company has a long-term debt of Rs 1,200 crore of which no repayment is scheduled in the near future.
Funding, never an issueReiterating that funding was never an issue for Uttam Galva, Mr Miglani said the company had enough liquidity and had also tied up funds for its expansion projects.
With this deal, Uttam Galva will have an assured back up for its raw material requirement.
“Though we may not get any concession on pricing, preference will be given for delivery,” he said. Last year, the company procured over 500,000 tonnes of hot rolled coils from ArcelorMittal.
Uttam Galva plans to increase its production from 600,000 tonnes to 800,000 tonnes this fiscal.
Source