Jindal Strips Ltd (JSL) has tied up long-term debt of around Rs 90 crore with financial institutions to meet the Rs 184-crore redemption fund for their $50-million Euro-convertible bond issue of November 1993.
The rest of the funds will be met through internal accruals and short-term funding.
At the time of the issue, the bondholders were given the provision of exercising a `put' option in March 1997, or the option of final redemption in March 1999.
The company, whose $50-millon convertible bonds issue was oversubscribed, had subsequently exercised the green shoe option, thereby mobilising $60 million.
Out of this, $9.5 million has already been converted into equity. Thus, the total size of the redemption fund is $50.5 million, which may be converted into shares at a price of Rs 352 per share.
At present, the JSL scrip is hovering around Rs 100 and bondholders may not want to hold to the bonds or convert them into equity.
The company is thus faced with the prospect of having to pay the entire amount of $50.5 million by the end of the present fiscal year.
Sources point out that Jindal Strips has undertaken a sizeable investment in expansion of melting capacity from one lakh tonne to 2.5 lakh tonnes. This is expected to yield results in the coming months.
The company already has a 20 per cent share of the market for stainless steel slabs. And after the completion of the expansion programme at its Hisar and Raigarh units, the share is expected to go up to 27 per cent.
JSL is also expected achieve self-sufficiency in power at the end of the expansion.
The company is set to become the only manufacturer of blade steel in the country and only the fourth one in the world after British Steel, Hitachi and Sandvik.
This forms part of a strategy by the company to concentrate on the production of value-added cold-rolled products.
With the stabilisation of the blade steel project at Hisar, it will have a capacity of producing 3,000 tonnes of blade steel of a given thickness.
At present, the entire amount of the blade steel is imported into the country.
