Hindalco issue subscribed 56%

Hindalco Industries’ closely watched Rs 5,050-crore rights issue, aimed at repaying expensive bridge loans taken for the Novelis acquisiti
on, saw subscriptions of about 56%, according to final data submitted on Thursday.

The Aditya Birla flagship company received subscriptions for over 29.42 crore shares, representing 55.97% of the total quantity on offer. The issue was among the first to hit the equity markets even as the financial turmoil was unfolding. The timing of the issue had led to a major fall in the stock price, which was lower than the rights offer price.

Under the rights offer, Hindalco issued 52.58 crore shares at a price of Rs 96, including a premium of Rs 95 each, in the ratio of three shares for every seven equity shares held.

On Thursday, the stock of Hindalco plunged by 12.1% to Rs 69.75 as it is a part of the 30-share sensex and is thus not regulated by daily trading limits. The shares have fallen by 38% in the past month. According to the underwriting agreement, ABN Amro, Citigroup, Deutsche Equities, DSP Merrill Lynch and SBI Capital Markets will subscribe to 17.89 lakh shares, totalling about Rs 1,717.88 crore.

The promoters and associated companies bought 39% of the rights offer and may buy an additional 10%. ABN Amro, Citigroup Global, Deutsche Equities, DSP Merrill Lynch and SBI subscribed to 3,57,89,202 shares each, according to the data issued by Hindalco.

Hindalco had taken a $3.03 billion bridge loan to acquire Novelis and the proceeds from the rights issue were aimed at partly repaying the amount.

Hindalco’s rights issue is expected to have a close bearing on similar offerings. Tata Motors is scheduled to close its ongoing rights issue on October 20. The shares of Tata Motors, India’s largest automobile company, plunged sharply by 11.1% to Rs 250.55 on the BSE on Thursday, compared to the differential and ordinary rights offer prices of Rs 305 and Rs 340 respectively.

The auto company is planning to raise Rs 4,145-crore through the rights issue to part finance its acquisition of the Jaguar Land Rover brands.

The weak markets and tight liquidity conditions have eroded investor sentiment, forcing many companies to reconsider and rework their fund-raising plans. Even in the case of foreign currency convertible bonds, companies are being compelled to reset the conversion prices or reach a settlement with the bond holders, according to sources close to the development.

Source: EconomicTimes