Gujarat Ambuja exercises FCCB call option

Cement major Gujarat Ambuja has exercised the call option on its $100 million foreign currency convertible bond (FCCB) issued in 2001.

The conversion of bonds into equity share will translate into an increase in the equity capital of the company to Rs 176.40 crore from Rs 156.12 crore.

Consequently, the promoters' holding in the company will stand reduced to 25 per cent from the current level of 28 per cent, a company executive said.

Gujarat Ambuja's net worth has also risen by Rs 400 crore.

The company's share price has been ruling at a considerably higher level at around Rs 300 compared with its conversion price of Rs 222.34 a share.

Gujarat Ambuja had issued convertible bonds at a coupon rate of 1 per cent. According to the company, in the last 10 years, it has twice issued convertible bonds and in both instances the company has exercised call options and converted bonds into equity shares.

Gujarat Ambuja, having acquired a strategic stake of 14.45 per cent in The Associated Cement Companies (ACC), is well positioned as a combined entity to harness the industry upside specially on account of cement price increase.

Moreover, according to analysts, the demand-supply mismatch is on the verge of diminishing with no new capacities in the pipeline.