Hindalco Industries, the flagship firm of Aditya Birla group, on Thursday announced that it would issue rights at Rs 96 a share to raise about $1 billion (Rs 4,200 crore). The fund will be used to repay a part of the $3.03-billion bridge loan taken to buy Canadian aluminium maker Novelis in February 2007. The remainder will funded through debt and other instruments.
The issue is expected to open in October. The board, which met today, approved the rights issue ratio of 3:7, which means that every Hindalco shareholder will be offered three shares for every seven shares held. Earlier, the company had said it aimed to raise up to Rs 5,000 crore by issuing 40.9 crore shares, which would have entailed an equity dilution of 33 per cent stake at an issue price of about Rs 122.
“A volatile market forced us to push the price lower,” said one banker, who declined to be identified.
Officials at Hindalco could not be immediately reached for comment. The company’s board is scheduled to meet on Thursday to finalise the price and ratio, the aluminium maker said in a notice to the Bombay Stock Exchange.
The shares of Hindalco fell 2.69 per cent today to close at Rs 135.80.
The stock has lost 12.5 per cent since the rights issue was announced on June 20. The month-long offering is expected to open in September, the bankers said.
Share offerings in India have fallen sharply every month since January, when Reliance Power raised a record $3 billion. A quarter per cent slide in the BSE share index in 2008 has delayed at least 10 share offerings worth $4.1 billion, Thomson Reuters data showed.