Sundaram Clayton says its Equity Issue to QIBs oversubscribed by 1.6 times

The company intends to use the net proceeds of the issue towards prepayment and repayment of certain of the existing debt of the Company

Sundaram Clayton Ltd (SCL), the holding company of TVS Motor, today said that its has offered upto 12,64,501 new equity shares and the issue was oversubscribed by 1.6 times.

The company said that the issue price was fixed at Rs 297.50 per Equity Share, aggregating to Rs 37.62 crore.

 

The company today said that the IPP Committee of Directors on June 8th, noted the response to the Offer and Issue of 12,64,501 new equity shares of Rs 5 each and fixed the issue price at Rs 297.50 per share, being offered to QIBs.

The company has received applications for 20,14,665 equity shares and Issue was oversubscribed by 1.6 times.

 

"The IPP Committee, after consideration of the above, approved and adopted the Prospectus in respect of the Institutional placement of 12,64,501 Equity Shares, under Sebi's Regulations, 2009, as amended, at an price of Rs 297.50 per Equity Share, aggregating to Rs 37.62 crore." said in the announcement.

 

According to company's Red Herring Prospects company intends to use the net proceeds of the issue towards prepayment and repayment of certain of the existing debt of the Company, meeting capital expenditure requirements and general corporate purposes. Prepayment of loans may be subject to consent of the lenders and payment of prepayment charges.

 

The company in the prospects stated that the company relied on bank borrowings and cash generated from its operations to fund our working capital and capital expenditure requirements. As of March 31, 2013, on a consolidated basis, the company had an aggregate outstanding indebtedness of Rs 1,482.39 crore, under its financing agreements. 

 

Company's finance cost /interest expense was Rs 147.72 crore and Rs 130.11 crore for the years ended March 31, 2013 and 2012, respectively. 

 

“Although we intend to repay a portion of the outstanding indebtedness from the Net Proceeds of the Issue, our debt service costs are expected to remain high. Our debt service costs, as well as our overall cost of funding, depend on many external factors, including developments in the regional credit markets and, in particular, interest rate movements and the existence of adequate liquidity in the debt markets. We believe that the future availability of cost effective funding will be crucial and thenon-availability of such funding at favourable terms or at all could affect our business, financial condition and results of operations,” said in the Prospectus.