Daewoo Corporation has negotiated a deal with the Vivek Bharat Ram family and associates to raise its stake in DCM Daewoo Motors -- the Noida-based passenger car joint venture -- from 75 per cent to 87 per cent at a price of Rs 24 per share.
According to sources, the board of directors of the company will also be reconstituted and the company name changed after the rights issue as DCM will be left with a minimal shareholding in the company.
The deal, under which Daewoo will pick up the unsubscribed portion of the present rights issue including a part of the DCM stake, was finalised recently but is expected to take effect only after the Rs 688.77 crore rights issue of the company closes on February 13.
However, money from Daewoo has already come into the company as advance payments even before the equity hike has taken effect, after obtaining the necessary RBI clearances.
Sources disclosed that DCM had persuaded Daewoo to buy the additional stake at the negotiated price of Rs 24 per share, higher than the rights issue price of Rs 15.
The deal, which has been in the making for some time now, was apparently delayed because DCM had to get back some shares of the company that were pledged with the financial institutions like the ICICI and IFCI during the time when it was christened DCM-Toyota.
DCM Daewoo had earlier obtained government permission to raise its stake from the initial 51 per cent to 75 per cent in the company, by picking up 24 per cent stake of DCM Ltd which had an initial shareholding of 34 per cent in the company.
Subsequently, the company came to the capital market on December 16 last year with a 5:1 rights issue. DCM Ltd had spelt indicated its intention to sell a part of its stake in the joint venture in the offer document to the issue.
The rights issue has been priced at a premium of Rs 5 per share with a face value of Rs 10 and was initially scheduled to have closed today. However, the date was extended because of the delay in the finalisation of the buyout deal between the two partners, said sources.
