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Event: JISL has announced fund raising of approximately USD200mn by way of:
· 50.63mn equity shares on preferential issue for an amount of USD73mn (INR4,050mn) at INR80/share or SEBI price, whichever is higher.
· FCCB of USD55mn (INR3,055mn). Broad terms of convertible bond are:
· Conversion price will be INR115/share during the period of five years.
· FCCB will carry a coupon of 3% p.a. and YTM of 6%.
· FCCBs will be repaid in one tranche after five years, if not already converted.
· LIBOR-linked ECB up to an amount of USD75mn (INR4, 165mn) with a tenor of 6-10 years.
· Issue of 7.5mn warrants (1.85% of current O/S shares) to promoters of JISL @ INR86.5/share (average of 26 weeks).
International Finance Corporation (IFC) is contributing significantly to the FCCBs, apart from participating in equity/ECB. Part of equity funds are being raised from private equity firm Mount Kellett; ECBs will come from a combination of European Global Development Financial Institutions and Rabo Bank.
Impact: Positive for balance sheet, though with equity dilution
JISL expects annualised savings on interest to be in the INR800-1,000mn range, resulting in better bottom line and gearing (current D/E at 2.2x). However, this will lead to equity dilution of 12.6% (w/o considering FCCB conversion) and 17.3% (with FCCB conversion). JISL stated that this fund raising will provide crucial support during the current phase of business model change. It also added that receipt of government subsidies has gained momentum and the company expects to have significantly improved position in remaining part of FY13. Maintain ‘BUY’.
Regards,
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