Ballarpur Industries Limited (BILT), an Avantha group firm, announced the sale of its Malyasian subsidiary, SFI, for $500 million. This is the third sale from the debt heavy group this year after the sale of Crompton Greaves’ consumer durable business and power plant in Chhattisgarh to the Adani Group.
The equity consideration to be paid to Ballarpur will be subject to adjustments relating to debt, working capital and USD-MYR exchange rate, under the terms of definitive agreement, at the time of completion of the transaction.
The completion of the transaction is expected within three months and is subject to satisfaction of certain conditions precedent as set out in the agreement, including approvals from the Government of Sabah (Malaysia) and Pandawa Sakti's financing agencies.
Pandwa Sakti, alongwith its strategic partner in China, proposes to establish a pulp mill of over 1 million tonnes per annum capacity in Sabah, Malaysia for manufacture and sale of woodpulp to other countries. This project is based on financing by leading Chinese Banks. The proposed acquisition of SFI fits well with Pandawa Sakti’s plans by securing access to SFI’s plantation resources and operational pulp and paper facilities, a statement said.
“Given the prevailing market conditions, and the company’s strategy of divesting assets at the right prices to maintain a healthy balance sheet, the divestment of SFI is aligned with BILT’s objectives. The deal is expected to improve the leverage and strengthen the capital structure of the company significantly,” Gautam Thapar, Chairman of Avantha Group said.
CIMB Securities (India) Private Limited acted as the sole financial advisor to BILT for the Transaction.
SFI is one of Malaysia’s largest timber growers and wood processors. It manages a forest estate totalling 288,000 hectares, pulp and paper manufacturing facilities, and an integrated timber complex consisting of a saw mill and a veneer and plywood factory.
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