Guj NRE plans rights issue to ward off takeover threat

Voting rights of the promoters would go beyond 51 per cent.

The promoters of Gujarat NRE Coke will float a rights issue with differential voting rights (DVR) to ward off any takeover threat from companies seeking to secure coking coal assets.

The decision to float a DVR rights issue was to raise voting rights of the promoters to ward off any takeover threat, Gujarat NRE's Vice-Chairman and Managing Director, Arun Jagatramka, told reporters here today.

"This is merely a preventive action," Jagatramka said after the company's annual general meeting.

He said after the rights issue voting rights of the promoters, whose existing holdings stood at 41 per cent, would go up to over 51 per cent. The promoters' holdings at 41 per cent would remain unchanged.

Jagatramka said since the rights issue had been priced at Rs 1,000 per share, with premium of Rs 900, it is felt that the minority shareholders would not participate in the float. The current share price of the firm is hovering around Rs 160.

Institutions investors together hold 41 per cent stake in the company, while the remaining 18 per cent was public float. Jagatramka said institutions had responded positively to the DVR rights price.

About the company’s future plans, he said coking coal, primarily used for steel making, was a scarce commodity, adding that many steel firms were trying to secure coking coal assets abroad, but without success.

Gujarat NRE has coking coal mines in Australia and coke manufacturing facility in Gujarat. Jagatramka said the promoters deemed fit to raise voting rights which had come down following conversion of foreign currency convertible bonds into equity.

Jagatramka said the company was also either making creeping acquisitions from markets or by way of issuing warrants.

Post DVR, the equity base of the company would go up marginally. It would create a separate class of shares of the company. The size of the issue would be about Rs 120 crore. To a query, he said coking coal prices were not expected to come down in the near future.