Promoters of Southern Petrochemical Industries Corporation Ltd (Spic) will increase their stake by around 12 per cent in the company by infusing Rs 60-70 crore. The infusion will be through converting warrants into equity shares.
The board of directors recently approved a proposal to issue up to 3,72,76,700 warrants, convertible into 3,72,76,700 equity shares of Rs 10 each, to AMI Holdings Private Limited, a promoter group company, on a preferential basis. This will be subject to the consent of the shareholders and other entities. AMI Holdings is promoted by Ashwin Muthiah, son of AC Muthiah.
While the company officials were not available for comment, market analyst said taking the average price of the stock for the last six months, the infusion could be in the range of Rs 60-70 crore.
Post the allotment, the promoter group’s (MA Chidambaram) holding in the company will be around 47.57 per cent. It now has 35.81 per cent stake.
At present, state enterprise and one of the promoters, Tamil Nadu Industrial Development Corporation (Tidco), holds 5.32 per cent in the company. Post the allotment, Tidco share will come down to 4.34 per cent.
“Normally these warrants subscription means the promoters want to increase the stake in the company to have a better control.”
SPIC, which thrived during the licence raj, saw its fortunes decline ever since its fertiliser plant in Tuticorin was shut in 2007.
Ashwin, who belongs to the third generation of the MAC group, which founded Spic along with 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,” said the 46-year old, who took over as chairman from his father last year.
It may be noted, the company had a debt of around Rs 2,800 crore, and had paid almost 90 per cent of its dues. The strategy it used included selling some of the assets of Spic, getting the promoters to pump in money and converting institutions debt into equity.