McDowell to raise $250 mn overseas

The McDowell & Company board today proposed raising of funds not exceeding $250 million (nearly Rs 1,125 crore) by issue of global depository receipts (GDRs) or foreign currency convertible bonds (FCCBs).

The board has also proposed to increase of authorised share capital of the company from Rs 60 crore to Rs 170 crore, which would include preference and equity share capital.

The increase in the authorised capital is to facilitate issue of equity shares of around Rs 34 crore and issue of preference shares of around Rs 60 crore to the shareholders of the transferor companies, consequent upon the proposed amalgamation of various companies with the company and the balance of around Rs 25 crore to meet the fund raising activities. The present paid-up equity share capital is Rs 51.72 crore against the authorised capital of Rs 60 crore.

Ravi Nedungadi, president and chief financial officer, said the GDR/FCCB issue nod was only an enabling provision. The company is looking at a quasi public offering. "There is no stake sale likely by the promoters," he added.

Nedungadi said the board's decision was to facilitate a number of things. First of course, is to put into effect the merger plans, which were announced in the previous week.

That would obviously result in some increase in capital, consequent upon the merger of various entities. Second, some existing preference capital in Shaw Wallace Distilleries needed to be replaced. Third, facilitation of future fund raising.

So there was a three fold objective.

The company will convene an extraordinary general meeting of the shareholders of the company on November 07, 2005 to seek approval of the shareholders for raising funds and increase in authorised capital.