Rain Commodities not to bid anymore for GLC Carbon

Hyderabad-based Rain Commodities’ wholly-owned North American subsidiaries, Rain USA and Rain Canada, have withdrawn as rival bidder to Oxbow's proposal of C$14.00 per unit for acquiring the assets of the Toronto-based Great Lakes Carbon Income Fund. GLC Income Fund is a trust established to indirectly hold the securities of GLC Carbon USA, Inc., the world's largest producer of both anode and industrial grade calcined petroleum coke. Rain Canada would receive a termination fee of C$17 mn (Rs. 64 crores) in cash from the fund prior to it actually entering into an agreement with Oxbow as required under the terms of its agreement with GLC Carbon Fund.

Rain USA stills retains the option to sell its indirect 20.22% stake in GLC Carbon, acquired in March 2006, as the fund is required to ensure that US-based Oxbow makes an offer to each stockholder of GLC Carbon to buy such equity interests.

Read the article in Business Standard.
Related Posts:
Rain, Oxbow bids C$13.50 for GLC Carbon; draws Rain Commodities into bidding war

SAIL and Jaiprakash Associates in cement production JV

The Steel Authority of India Limited (SAIL) has entered into a 26:74 joint venture with Jaiprakash Associates for producing 2,2 mn tonnes of cement. The venture will spend Rs. 600 crores to set up the new plant. SAIL will hold 26% stake in the venture while the balance will be held by Jaiprakash. The clinker and partial grinding unit of the plant would be located in Satna in Madhya Pradesh and slag cement would be made in Bhilai in Chhattisgarh. The project is expected to be completed in 37 months.

Two unique things about the project are that, firstly, this is the first of its kind public-private partnership in the cement sector. Secondly, SAIL’s foray into cement production is important as cement prices have shot up in wake of demand overshooting supplies. The country’s current cement production capacity is 165 mn tonnes. About 30 mn tonnes of new capacity is expected to be added in a couple of years. SAIL currently sells slag to cement companies through medium-term contracts but the exercise is not enough for a total disposal of its stocks. The JV would enable the company for more productive use of the waste generated by it while producing steel.

The JV would use slag generated from SAIL’s Bhilai Steel Plant as basic feed for cement production, and has already signed a 30-year agreement with the Bhilai Steel Plant for supply of slag. SAIL is also looking at using its slag generated from Bokaro Steel Plant for conversion to cement.

Read The Economic Times article.

BCCL to buy 3.5% in Refex Refrigerants

The Economic Times reports that Bennett, Coleman & Company Limited (BCCL) will pick up a stake of around 3.5% in Chennai-based Refex Refrigerants, for an undisclosed sum. Refex is engaged in refilling-ozone friendly refrigerants and marketing refrigerant products in India. Refex is the only player in the country which has the distinction of refilling and marketing hydro-fluoro-carbons, which is a non-ozone depleting, environmentally safe refrigerant developed to replace chlorofluorocarbons in several air conditioning and refrigeration applications.

Opto Circuits to buy European medical equipment firm for around €16 mn

Bangalore-based Opto Circuits India Limited is planning to acquire a medical devices company in Western Europe. The name of the company has not been disclosed. The deal, estimated to be around €16 mn, is likely to be an all-cash deal and would most likely be concluded early in the next financial year.

The European company manufactures a wide range of balloon catheters assemblies and related products for coronary and other applications. Opto Circuits has a presence in the non-invasive medical devices segment.

In January 2006, Opto Circuits acquired Germany’s EuroCor GmbH for Rs. 60 crores. EuroCor designs and manufactures stents.

Read more in the DNA Money article.

Chinese aluminium firm buys 50% stake in Indian plant

The Times of India reports that Chinese aluminium firm Qingtongxia Aluminium Group is acquiring a 50% stake in an aluminium project of Ashapura Minechem in western India. The outlay on this project is somewhere around $651 mn. This is the first, and the biggest, Chinese investment in India in the aluminium sector. Qingtongxia has obtained approval from the National Development and Reforms Commission, the country's top planning body. The proposed facility will have an annual capacity of 1 mn tonnes annually.

Rain, Oxbow bids C$13.50 for GLC Carbon; draws Rain Commodities into bidding war

US-based Oxbow Carbon & Minerals Holdings, Inc. has bettered Rain Commodities’ offer of C$ 13.25 for the assets of Great Lakes Carbon Income Fund consisting of 73.56% ownership interest in GLC Carbon USA, Inc., the world’s biggest calcinated petroleum coke (CPC) maker.

Rain had acquired 20% ownership in the GLC Income Fund in March 2006 at an enterprise value for GLC Carbon at $656 mn. The company was looking at buying out the remaining equity and had entered into an agreement with the GLC Income Fund at a price of C$11.60 per unit. Oxbow entered the bidding on March 7 with an offer of C$13 per unit, forcing Rain to increase the bid to C$13.25. However, Oxbow seems to have bettered Rain’s revised bid with an offer of C$13.50 on Monday.

Oxbow is the world’s largest marketer of petroleum coke, a byproduct of oil refining, used in the production of electrodes for the steel and aluminum industries. Acquiring GLC Carbon will clearly give Oxbow a strangle-hold over the global market. Likewise for Rain, the acquisition means adding to its own substantial CPC capacity through wholly owned subsidiary Rain Calcining which will give it 28% market share in the West and a footprint across the Middle East, US and Argentina.

GLC Carbon has three plants in the US and one in Argentina. Rain has five days to make a revised offer. Oxbow also holds 5% equity in Rain Calcining which is set to be merged with the parent later this month. Rain stands to gain a break-up fee of C$17 mn in case GLC accepts another offer.

Read the article in DNA Money.
Related Post:
Rain Commodities enters bidding war for GLC Carbon; raises bid price

Rain Commodities enters bidding war for GLC Carbon; raises bid price

Rain Commodities has entered into a bidding war for the acquisition of GLC Carbon USA and has raised its bidding price from the earlier C$11.60 per share to C$13.25. The acquisition is being effected through Rain Commodities’ wholly-owned subsidiary, Rain Commodities USA Inc.

This raises the effective price for the acquisition of 73.56% in GLC from Rs. 1624 crores to Rs. 1873 crores. The hike in price is in view of the competitive bid for GLC made by Oxbow Carbon and Minerals Holdings, Inc, which offered a price of C$ 13.00 per share.

Under the amended agreement, the termination fee has also been increased from C$ 14.5 mn to C$ 17 mn. The termination fee will be payable to Rain Commodities by the GLC Income Fund, the holding company of GLC Carbon, in case a third party shows interest in buying GLC Carbon and the deal turns in favour of the third party.

The acquisition of GLC Carbon will make Rain Commodities the world's largest producer of Calcined Petroleum Coke (CPC) with a total capacity of 2.43 mn tonnes per annum. The acquisition would be funded by a mix of debt, internal accruals and funds raised through QIP. Rain Commodities is also planning to merge group company, Rain Calcining, which is into CPC production, with itself to achieve business synergies.

Read the article in The Economic Times.
Related Posts:
Rain Commodities to buy Canadian carbon company for Rs. 1624 crores
Rain Calcining to merge with Rain Commodities

Goldman Sachs to buy stake in Hyderabad-based Pennar Cements

Global investment bank Goldman Sachs may buy a strategic stake in the Hyderabad-based Pennar Cements. Pennar Cements has a cement capacity of 4.4 mn tonnes and has been valued at Rs. 2000 crores. Goldman Sachs is reportedly eyeing a stake in Pennar Cements due to the potential of the sector which is poised for explosive growth in the next 3-5 years. Established in 1994, Pennar Cements has two plants with a capacity of 1.7 mn tonnes each. The company also has a 1 mn tonne plant at Nalgonda to primarily cater to demand in the south and south-eastern parts of the country.

Read the Hindustan Times article.

Tata Steel subsidiary NatSteel buys two firms in Vietnam for $41mn

NatSteel Asia, a wholly-owned subsidiary of Tata Steel, has entered into an agreement to acquire controlling equity stake in two rolling mills located in Haiphong, Vietnam at a combined enterprise value of $41 mn. NatSteel will take 100% stake in SSE Steel, which is a 250,000 TPA bar / wire rod mill. In Vinausteel, NatSteel will take 70% with the balance 30% being held by Vietnam Steel Corporation. The company has a capacity of 180,000 TPA. The transactions are likely to be completed by June 2007. SSE Steel has one of the most modern rolling mills in Vietnam, and Vinausteel is one of the best-known brands in Vietnam for reinforcement bars.

Read the Business Standard article.

Uttam Galva ties up with UK-based Liberty Commodities for Ghana steel plant JV

Uttam Galva Steels Limited, one of India’s leading galvanized steel producers, will invest up to Rs. 450 crores to set up a galvanizing and cold-roll mill complex in Ghana in a joint venture along with Liberty Commodities, a UK-based trading major with interests in metals and oil. The JV firm, Ghana Iron & Steel, will initially invest about Rs. 270 crores. Uttam Galva will have a majority stake in the JV. The joint venture company is believed to have already acquired land for the project.

The complex will include a hot-dip galvanizing line with a capacity of 75,000-tonne-per-annum that will be functional in 18 months. Later, a 250,000 TPA cold mill will be set up to feed the galvanizing unit. Till then, cold rolled coils will be exported from India and Bangladesh. The initial investment of Rs. 270 crores will be made for the two units.

Read The Economic Times article.

IFC to invest $40 mn in West Coast Paper

The World Bank-private equity arm International Finance Corporation (IFC) will invest $40 mn (Rs. 180 crores) in West Coast Paper Mills Limited. It has completed the due diligence of West Coast and a formal announcement is expected to come soon.

The Rs. 550 crore-West Coast Paper Mills will get the investment from IFC by April. The investment will be made in the form of debt for the company’s Rs. 1000 crore-expansion plans, but there would be no equity sale to IFC.

Private equity investment in domestic paper companies is rising steadily and could grow further as the sector prepares to spend Rs. 13,000 crores in the next three years to expand capacity. IFC earlier had invested $40 mn in Andhra Pradesh Paper Mills Limited in debt and equity.

West Coast has plans to ramp up capacity from 180,000 tonnes to 300,000 tonnes per annum in the next three years. The company has recently placed orders to global firm Metso for pulp line.

Local paper companies, including Ballarpur Industries (Bilt), Tamil Nadu Newsprint, JK Paper and West Coast, will be adding over 2 mn tonnes in capacity to the current total capacity of over 6 mn tonnes in next three-year period.

Read the article in DNA Money.

Tata Steel to buy Australian coal mining company

Post its mega-purchase of Corus, Tata Steel may now buy into a coal mine in Australia, as part of a larger strategic plan to scout for global opportunities to secure cheaper raw materials. It is looking at buying possibilities elsewhere across the world too. Tata Steel already has minority stake in a coal mine in Queensland, Australia.

Read more in The Economic Times article.

Cummins buys out Tata Group’s stake in Tata Holset

The $11.4 bn-Cummins, Inc. will acquire the stake held by the Tata Group companies in Tata Holset, its over 12-year old 50:50 JV for an undisclosed sum. It has been rechristened as Cummins Turbo Technologies. The company manufactures turbo chargers for medium and heavy-duty diesel engines for power generation, off-highway and on-highway vehicles. The Tata stake in the JV was held by Tata Motors, Tata Industries and Tata International.

Cummins recently announced a unified branding strategy to align its family of businesses under the Cummins brand. Following this new initiative, Tata Holset will be renamed and re-branded as Cummins Turbo Technologies.

Cummins, Inc. has another equal joint venture with the Tata Group called Tata Cummins, based in Jamshedpur. It manufactures the Cummins B series of engines and will not be affected by equity changes in Tata Holset / Cummins Turbo Technologies.

Read more in The Economic Times article.

Gujarat Ambuja sells 11% in Ambuja Cement to Holcim

Gujarat Ambuja Cements has sold 11% stake in Ambuja Cement India Limited (ACIL) to Holcim for Rs. 526.5 crores. Gujarat Ambuja owns 33% in ACIL. It has exercised its put option for an 11% stake in ACIL and has sold 9.53 crore shares to Holcim. GACL made a profit of Rs. 240.7 crores by selling these shares. After this sale, Gujarat Ambuja owns 22% shares in ACIL and Holcim the remaining 78%. Holderind Investments, a subsidiary of Holcim, currently holds 16.51% stake in Gujarat Ambuja, while ACIL holds 9.93% stake in the company.

Read the Business Standard article.

Hong Kong-based ADM Capital to invest Rs. 80 crores in Rama Pulp and Papers

ADM Capital, a Hong Kong-based distressed debt fund will invest about Rs. 80 crores in mid-sized paper company Rama Pulp & Papers, which will use the funds for capex and for future programmes, including an acquisition (See Related Post). ADM is learnt to have been selected from players like Bank of America, Actis and DBZ.

ADM Capital joins a growing list of foreign private equity firms such as Citigroup, Standard Chartered, WL Ross, Clearwater and Eight Capital that have been cherry picking underperforming companies in India that they think have the potential to grow and churn profits in the next 4-5 years.

Formed in 1996, ADM Capital advises investment funds that make principal investments in distressed companies and special investment opportunities. ADM Capital had earlier joined Asian Development Bank to raise a $138mn fund to rehabilitate distressed companies in Asia. India’s distressed assets are estimated at $55 bn (about Rs. 253,000 crores). Distressed debt funds typically focus on companies that have either filed for bankruptcy or are likely to do so in the near future. The fund gets involved in restructuring to pull the company out from bankruptcy. Distressed debt firms often forgive the debt obligations of the company in return for equity.

Read the article in The Economic Times.

Holcim to buy additional stake in ACC and Gujarat Ambuja

Swiss cement company Holcim is planning to increase its control in ACC and Gujarat Ambuja Cements for around Rs. 2700 crores. Holcim is in talks to buy Gujarat Ambuja Cements’ 33% stake in Ambuja Cement India Limited (ACIL). ACIL, in turn, holds 35% in ACC and 9.93% in Gujarat Ambuja Cements. At present, Holcim owns 67% in ACIL. The acquisition will make ACIL a wholly-owned Holcim subsidiary.

The proposed move by Gujarat Ambuja is in line with its two-year-old agreement with Holcim under which it had reserved the put (or sell) option and Holcim had the call (buy) option for one-third of ACIL. In 2005, Holcim had bought a 67% stake in ACIL, 40% from the government of Singapore and American International Group and 27% through subscription of preferential shares, for $800 mn (Rs. 3502 crores).

Read the Business Standard article.

AV Birla Group bids €85 mn for Italian fibre firm

The AV Birla Group has reportedly made a bid of close to €85 mn to acquire Italian cellulose fibre company BembergCell. Bemberg Cell is a financially distressed company and is on the block through a corporate administered process.

BembergCell has three production centres located in Italy with 155 spinning machines to produce yarns. BembergCell is the result of the union of three companies: Bemberg, Novaceta and Nuova Rayon. The company employs close to 400 people. The other bidders in the fray include a top manager of another Italian fibre company, Italo Fabbro, and Germany-based International Chemical Investor, promoter of the brand Erika.

Read The Economic Times article.

L&T merges Datar Switchgears with itself

Larsen & Toubro Limited (L&T) has reportedly merged the Nashik-based Datar Switchgear with itself for an undisclosed amount. L&T has also absorbed 160 workers of Datar Switchgears in its Ahmednagar facility. The remaining legal formalities in this regard are expected to be completed within the next one or two months. The distressed Datar Switchgear, spread over four acres in Ambad in Maharashtra Industrial Development Corporation (MIDC) facility, was engaged in the manufacture of electrical and electronic products.

The company was a pioneer in the production of circuit breakers. The move is aimed at extending its presence in the low voltage electrical business. The Board of Industrial & Financial Restructuring (BIFR) has also reportedly given its clearance for the merger of Datar Switchgears with L&T. L&T has already shifted all the technology and machinery of Nashik-based Datar Switchgears to its Ahmednagar facility in Maharashtra.

Datar Switchgears, established in 1984 in Nashik, had indigenously developed the technology for the manufacture of earth leakage circuit breakers (ELCB) and minutes circuit breakers (MCB). Datar Switchgears was also involved in manufacturing switchgears, ultrasonic welding machines and of capacitor panels, for rental and outright sales. But the company had financially come into distress with the collapse of company’s cash flow and affecting payments of interest and principle to financial institutions, banks and other financiers, and also a loss of substantial business opportunities.

Read the Business Standard article.

Shell buys out BPCL’s 49% stake in Bharat Shell

Shell Overseas Investments has bought out Bharat Petroleum Corporation Limited’s (BPCL) 49% stake in Bharat Shell. Both companies want to focus on their own specific lubricants brands in the growing lubricants market in India. The financial details of the deal have not been disclosed. Bharat Shell was a 51:49 JV between BPCL and Shell Overseas and was incorporated in 1993 for marketing Shell’s lubricants in the country. The joint venture has an authorized capital of Rs. 250 crores and a paid-up capital of Rs. 200 crores. Bharat Shell also markets LPG to both domestic and industrial consumers.

Read more in the Business Standard article.

Clariant, DIC, Ciba race for Asahi Songwon stake

Major foreign chemical companies are vying for a stake in Ahmedabad-based pigment manufacturer Asahi Songwon Colors Limited (ASCL). Specialty chemical majors Clariant, DIC and Ciba are said to be holding talks with ASCL for a stake sale. Clariant already holds a 9.39% stake in Asahi. A stake in ASCL would give the buyer access to cost-effective and reliable supplies of raw materials.

ASCL soon will be raising Rs. 44 crores from its initial public offering to fund the expansion project at its Vadodara plant at a cost of Rs. 52 crores. The company has already received a term loan of Rs. 8 crores from the State Bank of India. ASCL’s turnover for FY05-06 was Rs. 24.5 crores and net profit at Rs. 2.6 crores. Unaudited results for the six months of FY 06-07 show a turnover of Rs. 31 crores and the net profit at Rs. 4.6 crores.

Read more in the Business Standard article.