Varun Shipping To Revive Rs 36cr Rights Issue

Company officials said the issue is now scheduled for either December this year or January 2001. The company was earlier planning come with the issue in March this year. The issue was, however, put on the backburner owing to recessionary conditions then prevailing in the industry.

"Earlier, we had decided not to go ahead with the issue following the downturn in the industry. There are now signs of revival which is why we have decided to revive the issue," said Arun Mehta, vice chairman and managing director.

The rights issue is being floated to part finance the company's expansion. The shipping major is planning to acquire liquefied petroleum gas (LPG) carriers and crude tankers. This acquisition will be financed by internal accruals, the rights issue and debt.

The issue will comprise fully convertible debentures (FCDs) and will carry a coupon rate of 14 per cent. The FCDs can be converted at par to equity after a year.

SBI Capital Markets and ICICI Securities and Finance Company are the co-lead arrangers to the issue. The company has already received in writing commitment up to 45 per cent of the issue. These have come from the promoters---the Khatau family, International Finance Corporation, Washington, and ICICI.

Varun Shipping is a widely held company with a public holding of 45 per cent. Varun is now present in the bulk carrier, tanker, and gas carrier segments of the shipping industry. It was the first company to foray into LPG carriage in 1996.

The company has now chalked out a plan to enter the liquefied natural gas (LNG) segment which is now regarded as the sunrise sector in shipping. It has tied up with South Korean major Hanjin Shipping for foraying into this segment. The Varun-Hanjin consortium is now planning to bid for the tender floated by Petronet LNG.