Rain Calcining to buy mega US firm

Rain Calcining has reached an advanced stage of talks with an American calcining giant for acquisition. The US company has over four times the production capacity of the Hyderabad-based calcining company. Rain Calcining has a capacity to manufacture of 300,000 tonne per annum of calcined petroleum coke "" a high purity carbon used in the electrolytic smelting process that produces aluminium.

Sources close to the deal said it would be a leveraged buyout and the acquisition cost could be in the region of about $100 million. They added that the acquisition would help the company to be one of the largest calcining players in the world. If market sources are to be believed, the company on which Rain Calcining has set its eyes on is the New York-based Great Lakes Corbon.

Technically, a leveraged buyout means taking over a company using a significant amount of borrowed money, usually 70 per cent or more of the total purchase price.

Rain Calcining managing director N Jagan Mohan Reddy was not available for comments. Paresh Chawla, vice-president, strategy and planning, said the company had not signed any deal with any American company thus far.

Officials of Great Lakes Corbon could not be contacted.

"The company is looking at various options to expand its business in and outside the country. We intend to expand business in the US, Europe and China, " Chawla said.

Rain Calcining has recently signed a joint venture to set up a manufacturing company in Kuwait with a capacity of 350,000 tonne a year. Alsagar, a Kuwait-based firm, would pick up a 76 per cent stake in the venture. Rain Calcining and an US firm, Oxbow, would pick up a 12 per cent stake each in the venture. Rain Calcining would invest $ 5.5 million towards the equity of the joint venture.

Rain Calcining recorded a net profit of Rs 12 crore in the last financial year over total sales of Rs 364.25 crore.