15:1 Ratio For Itc Classic, Icici Merger

The boards of ITC Classic Finance Ltd and ICICI Ltd yesterday fixed the swap ratio at 1 equity share of ICICI for 15 equity shares of ITC Classic.

The merger will be effective April 1 While some employees of ITC Classic will be absorbed by ICICI as per its requirement, the balance will be redeployed by the ITC group.

The swap ratio was decided upon on the basis of the recommendations of two chartered accountancy firms - C C Chokshi & Co and Bansi S Mehta & Co. The face value of the shares of both companies is Rs 10.

 

As per the agreement between ICICI and ITC Ltd, the latter will infuse long term funds amounting to Rs 350 crore into it by way of of preference capital of 20 year maturity carrying a nominal dividend of Rs 100 per share of face value of Rs 1 crore.

In a release issued yesterday, ICICI said that this amount will be initially brought in as an interest free advance to ITC Classic by January 11 1998. This will be adjusted against the issue of preference capital by ICICI on sanction of the merger by necessary authorities. There will also be an inflow of Rs 272 crore on account of sale of intra ITC group assets owned by ITC Classic.

ITC Classic will prepay all the dues of secured creditors by January 11, 1998, so as to reduce its interest burden. ITC will assume the liabilities and obligations in relation to all guarantees and indeminities issued by ITC Classic. ICICI expects to benefit because ITC Classics retail infrastructure for fixed deposits provides a ready platform to further ICICIs foray in fixed deposits.

Access to the retail distribution infrastructure and a ready base of over 7,00,000 retail investors will considerably reduce the lead time for establishing a retail distribution network for its debt products.