JK Paper to raise $17 mn overseas

JK Paper Ltd will raise $17 million through a gross depository receipt (GDR) issue and foreign currency convertible bonds (FCCBs) to part finance its Rs 335-crore expansion plans.

"The decision was cleared by the board today and the issue will take place in the next 15-30 days," said Satish Mandhana, chief financial officer and head of business strategy of the company.

To fund the expansion, the company has already entered into an agreement with Washington-based International Finance Corporation (IFC) to allot 10 per cent of its equity shares worth Rs 50 crore.

Promoters and internal accruals would invest about another Rs 50 crore each towards this expansion. The GDRs and FCCBs would together raise the required remaining capital.

With the $17-million capital raise, the company will be "financially closed for the investment plans and will thus not be raising capital from the stock market", said Mandhana.

The Rs 335-crore expansion plan includes the setting up of a 60,000 tonne per annum (tpa) multi-layer packaging board plant in Surat, Gujarat, and some modernisation projects.

Further, the funds raised through the GDRs and FCCBs will not be used for the next stage of investment (of Rs 700 crore) that the company plans to make in the next 3-5 years.

"The Rs 700-crore expansion plans are still at the drawing board stage. We first wish to complete current phase of expansion," added Mandhana.