PEs to acquire 21 percent stake in Bilt arm for $175 Mn

By siliconindia   |   Wednesday, 23 January 2008, 12:06 Hrs
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New Delhi: In a $175 million deal (Rs 700 crore), Singapore government investment arm GIC and JP Morgan are together picking 21 percent equity stake in Ballarpur Paper Holdings (BPH), a Dutch step down subsidiary of paper producer Bilt.

Once the deal is struck, BPH would be valued at $825 million (Rs 3,300 crore), higher than the current market capitalization of the parent company Bilt, which is valued at Rs 2,640 crore ($660 million).

The PE deal for BPH is part of the corporate restructuring plan announced by Bilt. As part of the plan, the company's commodity paper business in India would be hived off into a separate wholly owned subsidiary.

As part of the its capital restructuring plan, Bilt would split the face value of its share from Rs 10 per share to five shares of Rs 2 each. Then it would buyback a compulsory 40 percent of equity holding from each of its shareholders. It would reduce the total outstanding shares even as the equity holding structure of the shareholders in percentage terms would remain intact.

BPH was created last year for the purpose of acquiring Malaysia's largest paper and pulp company Sabah Forest Industries (SFI). The company owns 97.8 percent of the capital in SFI and the balance 2.2 percent is held by the government of Sabah, a province in Malaysia.

In addition, that BPH would acquire the commodity paper business of Bilt in India, representing three units out of the six manufacturing plants in India which together generated almost two thirds of the total revenues of Bilt in FY'07. This transaction would involve BPH raising a total of Rs 1,950 crore for the transfer of assets relating to the commodity paper of the company.

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