Malwa Cotton to offer 10% stake to IDBI

Interest outstanding will be converted into equity

Malwa Cotton Spinning Mills, the Ludhiana-based cotton, polyester, viscose, acrylic and blended yarn maker, is set to allot nearly 10 per cent stake to the Industrial Development Bank of India (IDBI) Ltd as part of its debt restructuring.

The board of the Rs 370-crore textiles company will meet on Thursday to finalise the allotment of nearly 5.80 lakh shares, representing about 10 per cent of its paid-up equity capital.

The price of the allotment is likely to be fixed at Rs 48 a share, in line with the Securities and Exchange Board of India norms. The price is at a 30 per cent discount to the stock's closing of Rs 62.90 on the Bombay Stock Exchange.

The allotment will be done next week. Sources close to the development said Malwa Cotton's interest outstanding on loan taken from IDBI will converted into equity.

The company has a principal outstanding of Rs 30 crore to IDBI. The total debt is around Rs 130 crore.

The promoters, Vidya Sagar group, hold 55.83 per cent in the company as on June 30, 2004. Mutual funds and UTI hold 15.70 per cent, while the combined holding of banks, financial institutions and insurance companies stands at 1.30 per cent.

Private corporate bodies hold 12 per cent , while the balance 15.08 per cent is widely held by public.

In addition to Malwa Cotton, other group companies include denim maker Malwa Industries, woollen products maker Punjab Woolcombers and the fancy garments producer Oswal Knit India.