Jisco to take 52% stake in Southern Iron

Sajjan Jindal controlled Jindal Iron & Steel Company (Jisco) is set to take over 52 per cent stake of the Coimbatore-based Southern Iron Steel Company (Siscol) from Lakshmi Machine Works.

According to sources close to the development, Jisco is expected to sign a memorandum of understanding in a couple of days with Lakshmi Machine Works, the promoters of Siscol.

It is learnt that the acquisition will be made at Re one a share, over 90 per cent discount from the current market price of Siscol shares at Rs 13. At this rate, Jisco's cost for acquisition of the promoters shares will be around Rs 18 crore.

Sources close to the development said, post acquisition, Jisco will come out with a 20 per cent mandatory open offer to provide an exit option to the minority shareholders.

Siscol has a capacity of producing 5 lakh tonne per annum of long products. Post acquisition, Jisco's capacity will go up to 3 million tonne a year.

Jisco had said that it was looking at doubling the capacity of the integrated steel plant to a million tonne per annum, with a focus on manufacturing value-added products.

As per the deal, Jisco will also be taking over all the liabilities, which includes debt of Rs 850 crore. However, as per Siscol's corporate debt restructuring package, a substantial amount of debt will be converted into equity.