Fairbridge Capital (Mauritius) Ltd, an affiliate of Canada’s investment firm Fairfax Financial Holdings Limited, is investing additional Rs 500 crore ($82 million) in tour operator Thomas Cook (India) Ltd through a preferential allotment, according to a disclosure on BSE.
Presently, Fairbridge Capital owns a controlling 74.96 per cent equity stake in Thomas Cook. It is picking 62,50,000 compulsorily convertible preference shares (CCPS) of Rs 10 each at a price of Rs 800 per share convertible into 6,25,00,000 equity shares of the company having face value of Re 1 per share.
Fairbridge Capital acquired 77 per cent in Thomas Cook (India) from its UK-based parent for $171 million in 2012 and hiked its stake to over 87 per cent stake through the open offer. It later diluted its holding to 75 per cent through an institutional placement programme (IPP) to meet the regulatory requirement of minimum public shareholding.
Meanwhile, Thomas Cook entered into a deal to merge resort owner Sterling Holiday Resorts (India) Ltd with itself in a multi-stage deal. As part of the deal, Thomas Cook will first make a preferential allotment for 23.24 per cent of Sterling at about Rs 190 crore and will then purchase another large stake for Rs 270 crore by purchasing shares of existing shareholders. This will be followed by a mandatory open offer for buying up to 26 per cent stake for Rs 230 crore. Thomas Cook will also have the option to buy an additional 7.2 per cent for Rs 63 crore.
The share-swap ratio for the merger has been fixed at 120 shares of Thomas Cook for every 100 shares of Sterling.
The merger, which is expected to close by the fourth quarter of 2014, will give Thomas Cook access to Sterling’s 19 properties in 16 holiday destinations across India.
Given that the quantum of fresh equity issue of Thomas Cook is dependent on the acceptance ratio of the open offer to public shareholders of Sterling, the exact holding of Fairbridge post the fresh preferential allotment cannot be immediately ascertained.
(Edited by Joby Puthuparampil Johnson)