Wilmar to acquire strategic stake in Shree Renuka Sugars Limited

Shree Renuka Sugars Limited ("SRS" or "the Company") has entered into an agreement with Wilmar International Limited ("Wilmar"), through its 100% subsidiary Wilmar Sugar Holdings ("WSH"), to facilitate the investment of approximately US $200 million in primary capital into SRS.

This would be done in two steps. The first step would involve an investment of upto Rs 5,170 million by WSH in SRS through a preferential allotment of upto 257.5 million shares of fresh equity to WSH at a price of Rs 20.08 per share. After this preferential issue, the Existing Promoters and WSH would hold 27.5% of SRS' expanded equity share capital. As per SEBI guidelines, there will also be an open offer by WSH and the Existing Promoters for up to 26% of the expanded equity share capital of the company SRS at a price of Rs 21.89 per share. The second step would involve Wilmar and the Existing Promoters of SRS jointly participating in a Rights Issue to raise upto a further Rs 7,254 million of primary equity capital for SRS.

Under a joint venture agreement signed between the Existing Promoters, WSH and the Company, SRS would be jointly controlled by the Existing Promoters and Wilmar, with both parties holding equal shareholding and board representation in SRS. The Existing Promoters will continue with the management of the Company with Wilmar being actively involved in strategic decisions. The investment is subject to approval of shareholders of SRS, anti-trust clearances in India and Brazil and such other statutory clearances as may be deemed necessary.

The proceeds of this investment/fund-raising would be used to pay down existing debt of SRS in India. As a strategic shareholder, WSH's shareholding in SRS and the capital infusion will strengthen the Company's financial and business position and also provide a further platform for growth. Wilmar's global reach and strong presence in key sugar producing countries is complementary to Shree Renuka's business.

Motilal Oswal Investment Advisors acted as the strategic and financial advisor to SRS, while Crawford Bayley & Co., AZB & Partners and Veirano e Advogados Associados, Brazil acted as legal advisors. Standard Chartered Bank acted as financial advisor and would be the Manager to the Open Offer.

Shares of SHREE RENUKA SUGARS LTD. was last trading in BSE at Rs.22.5 as compared to the previous close of Rs. 21.7. The total number of shares traded during the day was 4230454 in over 8594 trades.

The stock hit an intraday high of Rs. 22.9 and intraday low of 21.75. The net turnover during the day was Rs. 94942854.

Source : Equity Bulls

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