Citicorp to pick 14.9% in Monnet

Citicorp International Finance Corporation is set to pick up a 14.9 per cent stake in Monnet Ispat for Rs 35.27 crore through a preferential issue. Proceeds of the issue will partly fund the expansion of Monnet's manufacturing sponge iron and mild steel unit at Raigarh in Chattisgarh.

Monnet Ispat today informed the Bombay Stock Exchange that its board will consider at meeting on June 3, the allotment of 3.5 million equity shares of Rs 10 each at a premium of Rs 90 a share to Citicorp. Post issue, the equity of the company will increase to 23.5 million shares.

The board will also take a decision on the issue of two million convertible warrants of Rs 120 each to the promoters. The warrants can be converted into equity shares of Rs 10 each at a premium of Rs 110 a share and are exercisable within 18 months from the issue date.

A company source said, "The funds are being raised to finance our expansion project, which also includes a debt component, which is being tied up with the State Bank of India and its associates."

The company is in talks to raise around Rs 100 crore from the domestic market, while around Rs 50 crore will be raised through external commercial borrowings. The company is expected to complete the formalities of raising these loans by the month-end, the source said.

The company has envisaged an expansion of 4.5 lakh tonne per annum for its sponge iron plant, which will hike its capacity to 7.5 lakh tonne per annum. The expansion is expected to be completed by 2006.