Rain Calcining merges with Rain Commodities

The merged entity will be the world's largest calcined coke manufacturer.

The Hyderabad-based Rain Commodities today announced merger of Rain Calcining with itself in an effort to bring together the group's calcined petroleum coke (CPC) and cement businesses for better viability.

The merger, to be effected on April 1, will create the world's largest CPC making company with assets in India, Kuwait, the US and Argentina. It will enjoy nearly 28 per cent of the total CPC sales in the Western World.

Under the merger plan, Rain Industries' cement business will be transferred to Rain Commodities, while Rain Calcining's CPC and power generation businesses will be transferred to Rain Industries. Rain Industries is the cement making unit of Rain Commodities.

Rain Commodities will appoint financial and legal advisors for determining the share exchange ratio.

The merger decision is a reversal of an earlier proposal to amalgamate Rain Industries with Rain Commodities.

The announcement pushed the Rain Commodities stock by 1.1 per cent to Rs 187.05 while it pulled down the Rain Calcining stock by 2.5 per cent to Rs 51.95 today.

Rain Calcining makes 480,000 tonne of anode and industrial grade CPC per annum. CPC is a key process input used in the aluminium and steel industries.

Rain Commodities is in the process of setting up 240,000-tonne per annum CPC unit in Visakhapatnam with an investment of Rs 135 crore over 18 months.

Earlier this week, Rain Commodities said it would acquire assets of Toronto-based Great Lakes Carbon Income Fund's wholly-owned subsidiary Carbon Canada Inc for Canadian $ 437 million (Rs 1,624 crore). The fund's assets include 73.56 per cent stake in GLC Carbon and certain unsecured subordinated notes of Huron Carbon ULC, a wholly owned subsidiary of GLC Carbon.

Post acquisition, Rain Commodities stake in GLC Carbon will scale up to 94 per cent from 20.23 per cent which it bought American Industrial Partners Capital Fund last year.

Rain Commodities will also purchase the remaining shareholding in GLC Carbon from its management and other investors.

Rain's wholly-owned subsidiary Rain Commodities USA will be the vehicle for the transaction. On a fully-diluted basis, the enterprise value of the transaction is approximately Canadian $767million (Rs 2513 crore). The transaction is expected to be close by June.

GLC Carbon is the world's largest producer of calcined petroleum coke (CPC) with annual production capacity of 2.3 million tonne a year.

The proposed acquisition of GLC Carbon USA and the planned greenfield CPC plant are in line with the company's strategy to create global CPC assets across various geographical regions.