To invest Rs 900 crore for settling debt; formalities remain
Ahmedabad-based Kiri Dyes and Chemicals Ltd (KDCL) is in the process of acquiring the Germany-based DyStar Group — global leader in dyes and dyes solution with 21 per cent market share — for just ¤1 (Rs 69).
However, it will have to invest Rs 850-900 crore for repaymemt of debt and restructuring of the company, said sources close to the development.
The move will be a huge leap forward for Kiri Dyes, putting it in the league of companies with a billion-dollar turnover, sources added. DyStar clocked sales of Rs 5,500 crore in the 2008 calendar year.
DyStar is owned by Platinum Equity LLP. KDCL has expressed its intent to acquire DyStar and has a memorandum of understanding (MoU) with Platinum Equity Advisors to this effect.
“KDCL proposes to buy Platinum Equity’s holding in Dystar for a consideration for ¤1 only. However, KDCL shall also assume existing Dystar liabilities,” sources told Business Standard.
KDCL announced at the Bombay Stock Exchange today that the company, through its SPV Kiri Holding Singapore Private Ltd, had executed the purchase agreement on Friday, subject to necessary approvals under the laws of Germany. The agreement was for acquiring DyStar Group and its selective assets through insolvency, it said.
A senior company official said they were waiting for the German government approval and hoped to close the deal by the end of January.
DyStar has 18 production facilities in 12 countries with a total employee strength of around 3,500. DyStar has filed for insolvency for its sites in Frankfurt, Leverkusen, Brunsbuttel, Geretsried and Ludwigshafen.
KDCL is aiming to raise a part of the debt repayment through qualified institutional placement. And, the balance required for acquisition through a mix of equity and funding through a special purpose vehicle, said sources.
KDCL’s existing consortium for the deal includes State Bank of India, Bank of India, Exim Bank and Corporation Bank.
DyStar Group is a global market leader for dyes, dyes solutions, leather, performance chemicals, new technologies and custom manufacturing of speciality dyes and pigments. It provides high-quality products and services across the whole value chain in various sectors like apparel, hosiery, automotive, carpets and industrial fabrics.
As part of restructuring, KDCL will shift the headquarters of DyStar from Germany to Singapore.
The share price of Kiri Dyes today touched a 52-week high of Rs 657.35. The share rose by Rs. 54.05 from yesterday’s close of Rs. 603.30 per share.
