Gujarat Industries Power Company Ltd (GIPCL) has decided to offer two debt instruments Option A and Option B which will carry coupon of 15.25 per cent and 15.50 per cent respectively.
The company, which plans to raise Rs 100 crore by way private placement, has the option to retain the oversubscribed amount. However, since the instrument has been rated as AA minus for an amount of Rs 200 crore by CARE, it will require to upgrade the rating in case they want to retain more than the rated amount.
The redemption will be in three installments - 33 per cent will be redeemed at the end of the fourth year, 33 per cent at the end of the fifth year and 34 per cent at the end of the sixth year.
Option A has five slabs, and it provides front end discount from 0.25 per cent to 1.25 per cent whereby the yield-to-maturity (YTM) ranges from 15.91 to 16.23 per cent. Option B, which does not provide any slabs, has YTM of 16.10 per cent.
Option A is attractive for those interested in investing above Rs 50 lakh while Option B is attractive for an investment below Rs 50 lakh, said the merchant bankers to the issue. The issue, which opened for subscription on Tuesday, has already started receiving several enquiries due to the high coupon rate offered by the company, they added.
The instruments will be listed at the National Stock Exchange as well as the Baroda Stock Exchange, and the market lot will be one debenture with a face value of Rs 50 each.
The company is promoted by Gujarat Electricity Board which hold 21.62 per cent of stake in the company.
The other shareholders are Gujarat States Fertilizers & Chemicals Ltd (22.47 per cent), Gujarat Alkalies and Chemicals Ltd (19.03 per cent) and Petrofils Cooperative Ltd (5.61 per cent).
The money is being raised to funds the companys plan to expand generation capacity at Baroda. The new capacity of 162.5 mw will be from a naphtha-based plant, and will be at a site adjacent to GIPCLs existing gas-fired plant.
The redemption will be in three installments - 33 per cent will be redeemed at the end of the fourth year, 33 per cent at the end of the fifth year and 34 per cent at the end of the sixth year
