SPIC promoters to hike stake by 12%

Will infuse up to Rs 70 cr for convertible warrants to be issued to Ashwin Muthiah-promoted AMI Holdings

Southern Petrochemical Industries Corporation Ltd (SPIC's) promoters are likely to increase their stake about 12 per cent in the company by infusing Rs 60-70 crore. The infusion will be through the conversion of warrants to equity shares.

Company's Board of Directors on Monday approved, subject to the consent of the shareholders and other entities, a proposal to issue up to 3,72,76,700 Warrants, convertible into 3,72,76,700 Equity Shares of Rs 10 each, to A C Muthiah's son Ashwin Muthiah-promoted AMI Holdings Private Limited, a Promoter Group company on preferential basis.

While the company officials were not available for comment, market analyst said that taking the average price of the stock in the last six months the infusion could be in the range of around Rs 60-70 crore.

Post allotment, the promoter Group (MA Chidambaram group) holding in the company will be around 47.57 per cent as compared to 35.81 per cent now.

At present, Tamil Nadu Industrial Development Corporation, a Government of Tamil Nadu Enterprise and one of the promoters of the company, holds 5.32 per cent in the company, while the promoter group, including AMI Holdings, holds 35.81 per cent.
Post allotment, TIDCO share will come down to 4.34 per cent, while the MAC group holding will be increased to around 47.57 per cent.

“Normally these warrants subscription means, the promoters want to increase the stake holding in the company to have a better control”.

It may be noted, SPIC, which thrived during the licenceraj, had seen its fortunes decline ever since its fertilizer plant in Tuticorin was shut down in 2007.

Ashwin, who belongs to the third generation of MA Chidambaram (MAC) Group which founded SPIC along with Tamil Nadu Industrial Development Corp. Ltd (Tidco) in 1969, was trying to turn around the company.

“All the unfortunate circumstances are now behind us. Things are looking good at present and would continue to do so,” says 46-year old Ashwin, who took over as the new Chairman, from his father A C Muthiah, last year.

The company had a debt of around Rs 2,800 crore, and almost 90 per cent of its dues are now paid. The strategy it used was to sell some of the assets of SPIC, get the promoters to pump in money and convert institutional debt into equity.