Mumbai: Hindalco Industries, the metals flagship of the Aditya Birla Group, plans to raise up to Rs5,000 crore ($1.2 billion) through a rights issue despite the stock market slide, bankers close to the developments said.
The rights issue will now be priced at Rs96 a share, as against the initial plans for above Rs100, and would be offered in the ratio of 3:7 from the 1:3 proposed earlier, the sources said.
The board of Hindalco is meeting today to finalise the price and ratio, the company said in a filing with the Bombay Stock Exchange.
The issue is expected to open for subscription in September.
The money will be used to repay a $3.03 billion bridge loan it had taken to buy Canada's Novelis in February 2007. The remainder will funded through debt and other instruments, sources said.
Citigroup, Merrill Lynch, SBI Capital Markets, Deutsche Bank and ABN AMRO are advisors to the issue.
The company is also expected to raise debt and liquidate a part of its treasury investments in bonds and other instruments to close the bridge loan from ABN AMRO, Bank of America and UBS, taken at 80 basis points over LIBOR. The loan expires in November.
Bankers expect good response from institutional investors who collectively hold 28.1 per cent of Hindalco. Promoters Aditya Birla Group owns 31.4 per cent of Hindalco.
Hindalco is the world's largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia. Its Copper smelter is the world's largest custom smelter at a single location.
An industry leader in aluminium and copper, Hindalco Industries had a consolidated revenues in excess of $14 billion.
For the quarter ended 30 June 2008, Hindalco reported net sales and operating revenues at a flat Rs4,647.5 crore. However, profit before depreciation, interest and tax grew 16 per cent to Rs1,163.7 crore as compared to Rs1,005.7 crore in the corresponding period in 2007-08. Profit after tax, at Rs696.8 crore, was up 16 per cent from Rs598.6 crore in Q1 FY08.
Of the total revenue of Rs4647.5 crore, aluminium business contributed Rs1,943.0 crore. The profit before interest and tax for aluminium business was higher by 18 per cent from Rs638.2 crore to Rs750.4 crore in the corresponding quarter of the preceding year.
Revenues from copper business were lower at Rs2,706.6 crore against Rs2,926.2 crore mainly on account of planned shutdown of smelter-1 at Dahej.
The depreciation of the rupee against the dollar also affected the copper business by an estimated Rs151.9 crore for the quarter, the company said.
Hindalco's profit before interest and tax was lower at Rs74.3 crore against Rs112.3 crore in the corresponding quarter last year.