Bilt to sell Malaysian arm for $500M

Ballarpur Industries Ltd (Bilt), India’s largest paper company, said on Thursday it has agreed to sell its entire stake in loss-making Malaysian unit Sabah Forest Industries Sdn (SFI) to Pandawa Sakti (Sabah) Sdn Bhd, Malaysia, for an enterprise value of $500 million.

The deal is subject to necessary approvals and is expected to close within three months, Bilt said in a stock market disclosure.

In July, the company received board approval to sell its 98.08 per cent stake in the subsidiary. It had not disclosed the deal amount, nor the name of the buyer at the time.

Bilt had acquired SFI, the largest Malaysian paper firm, in 2007 for $261 million. This marked the first significant overseas acquisition by an Indian paper company and remains the biggest to date.

For Bilt, this move marked expansion of global interest in an otherwise conservative and slow-moving industry.

SFI makes paper and paper-related products. It also offers solid wood-related products such as rough and chemically treated sawn timber and panel-based products including dried veneer and raw plywood. It exports its products to Iran, Syria, Yemen, South Africa, Jordan and Saudi Arabia.

Bilt, part of the Gautam Thapar-led Avantha Group, has around half a dozen paper production units including the one in Malaysia.

The group has been facing a debt overhang and has divested several assets in the recent past including its stake in consumer appliances business under Crompton Greaves and part of its power generation business.

Bilt said the proceeds from the sale would be used to reduce debt of SFI besides other units. SFI is to be sold on a debt-free, cash-free basis.

Shares of Bilt jumped 6.4 per cent to end at Rs 15.85 on the BSE in a flat Mumbai market on Thursday.

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