SKF Bearings' Rs 88 crore rights issue has been oversubscribed in both the equity and non-convertible debenture (NCD) portions. The Rs 37.7 crore NCD issue with detachable warrants received more response from the market, and total subscription in the issue touched Rs 46.3 crore.
The Rs 50.3 crore equity shares issue garnered Rs 51.2 crore. According to sources, all the major institutional shareholders of the company -- UTI, LIC, GIC, Tata Investments and New India Assurance -- have subscribed to their entitlements.
Torsten Nordgren, managing director of SKF Bearings said, "The response from the institutional shareholders has been especially positive. Given the current slowdown of the economy, the over-subscription is a very positive sign for us."
HSBC Securities and Capital Markets is the lead manager to the company's rights issue.
SKF is planning to repay high-cost loans worth Rs 76 crore from the proceeds of the issue in order to improve profitability. The loan repayment programme is part of the Rs 137 crore capital expansion programme drawn by the company over the next two years.
While Rs 87 crore will be funded from the proceeds of the rights issue, the balance Rs 50 crore will be generated from internal accruals, the company had said in its rights issue prospectus.
The company has outstanding loans to the tune of Rs 146.35 crore, of which loans worth Rs 69.82 crore are repayable by the end of the current fiscal.
In addition, the company is also planning to spend Rs 23 crore and Rs 38.3 crore during the current and next fiscal, respectively, towards introduction of new products, quality upgradation, efficiency improvements and capacity enhancements, in addition to normal maintenance of its plan and machinery.
SKF has been undergoing a massive restructuring programme over the past three years, as part of which it has already reduced its manpower by almost 30 per cent through voluntary retirement scheme (VRS) schemes.
