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BILT board okays Graphic Paper buy

Our Bureau

NEW DELHI, Sept. 17

THE board of directors of Ballarpur Industries Ltd (BILT) on Monday accorded its in-principle approval for the acquisition of the entire equity capital of BILT Graphic Paper Ltd (BGPL), formerly Sinar Mas Pulp & Paper India.

A proposal to eventually merge BGPL with BILT after the completion of the consolidation, in the form of acquisition of 100 per cent equity of BGPL by BILT, also received the in-principle nod of the BILT board of directors.

The BILT board also authorised the company to issue fully convertible debentures (FCDs) up to Rs 250 crore on rights basis to part-finance the acquisition of the entire equity stake of BGPL.

About 83 per cent of the Rs 293-crore equity capital of BGPL is currently held by BILT Paper Holdings Ltd (BPHL), which is the privately-held Thapar family concern through which Sinar Mas India was acquired in May this year in partnership with ICICI Ltd. The balance 17 per cent of the equity of BGPL is with ICICI Ltd.

A statement issued by BILT said that the consideration for the acquisition of BGPL would be the acquisition cost of Rs 293 crore plus the holding cost from the date of acquisition. This consideration will be subject to valuation by an independent valuer.

The BILT board also directed the company to consider the option of sale of shares held by it in Janpath Investments & Holdings Ltd (JIHL), a wholly-owned subsidiary of BILT, to BPHL as part consideration for the acquisition of BPHL's holding in BGPL.

The entire subscribed capital of JIHL comprising 3,89,89,200 equity shares of Rs 10 each is now held by

BILT.

The decisions at today's board meeting follows the acceptance of the recommendations of the three-member committee of directors, which had been set up by the board on July 27 to evaluate various options (including means of financing) for consolidation of BGPL with BILT.

The committee comprised of Mr Gautam Thapar, Vice-Chairman and Managing Director, BILT, Mr M.J. Subbaiah, an ICICI nominee on BILT board and Mr Sanjay Labroo, Managing Director, Asahi India Safety Glass.

At today's board meeting, this committee of directors had been authorised to finalise the terms of the rights issue including the timing of the issue, price, premium, conversion, put and call option and allotment. The board has also directed the company secretary to convene an extraordinary general meeting of the shareholders for taking the requisite approvals.

The top management of BILT have been contending that the whole idea behind its decision to consolidate BGPL (Sinar Mas India) with BILT was to give an opportunity for the existing shareholders of BILT to directly participate in the acquisition of Sinar M as.

It has been for this reason that the management had earlier ruled out a direct merger of BGPL with BILT. The move to initially acquire the entire equity of BGPL and then merge it with BILT is expected to help in staving off criticism that the L.M. Thapar family would end up becoming the sole beneficiaries of the acquisition of Sinar Mas Pulp & Paper.