ABG Shipyard zooms on news of stake sale

ABG Shipyard surged nearly 19 per cent intraday and was trading at a weighted average price of Rs229.96 per share on the Bombay Stock Exchange (BSE) on Wednesday on reports that the debt-ridden company is looking for a strategic stake sale.

The scrip hit an intra-day high of Rs241.25 a share against its 52-week high of Rs310 per share. Total turnover rose to Rs47.73 crore while total volume stood at 2.08 million at 4.45 pm.

Media reports on Tuesday said the Mahindra group, Adanis and some foreign investors are in the race to acquire stake in the company which holds defence licence as well.

ABG Shipyard is in the process of a Rs11,000 crore debt restructuring package and is scouting for strategic buyers after its losses continued to mount.  

''An ABG official said the company was in discussions with investment bankers to raise equity and was looking at several options. Its chief financial officer Dhananjay Datar said the company cannot comment on rumours and will 'come out with official confirmation if any definite transaction takes place', according to a report in The Economic Times.

According to various  investment banking sources, the Mahindra Group, Adani and a few foreign players, which include some from Singapore, have been approached, the report suggests.

The promoters - ABG International, Rishi Agarwal and Kamlesh Kumar Agarwal - together hold around 62 per cent of the company, with ABG International owning the lion's share of 61 per cent.

ABG Shipyard has been struggling with huge losses. During the December quarter, its net loss widened to Rs294.46 from Rs156.08 crore in the year-ago period. Its net sales also slumped 89 per cent to Rs30.75 crore on yearly basis.

Meanwhile, CNBC-TV18 said, M&M has hired Amarchand Mangaldas to examine the company's books. It is learnt that the deal is likely to be routed via one of the subsidiaries of listed M&M and may trigger an open offer.