Goldman Sachs has picked 8% stake in XL Telecom & Energy by converting foreign currency convertible bonds(FCCBs) into shares at a significant premium to the existing market price. Goldman Sachs picked the shares at Rs 150 per share, that fueled a rally on the company shares as the scrip shot up almost 20% hitting the upper circuit of the day at Rs 31.9 at BSE.
It had raised $40 million in October 2007 and, last year, reset the price of FCCB convertible into equity from Rs 260 to 160 and had issued some shares due to such conversion from FCCBs.
The company, that was largely a CDMA technology telecom equipment maker till three years ago, has shifted its business focus towards renewable energy, that contributed 94% of its Rs 430 crore odd revenues for the 18-month period ended December’09.
The company is focusing on grid connected solar solutions that is believed to be growing faster compared with standalone conventional solar systems. The firm’s board had two months ago approved change in the name of the company to XL Energy Ltd to reflect the new business model. It entered into big losses last year and approached the corporate debt restructuring cell given defaults on debt and interest obligations.
This in turn was due to cancellation of large order from Spain in 2008 coupled with mark-to-market losses due to decline in raw material prices thereafter. This forced the firm to go for debt restructuring by banks led by SBI. The restructuring scheme that was approved in December last year included repayment of loans in 32 installments beginning quarter ending September’11, reducing rate of interest for three year period, selling off wholly owned subsidiary Khandola Distilleries Ltd and the ethanol business in 2010.
The total cost of restructuring for lenders stood at 234.6 crore and the promoters were to bring in Rs 40 crore in two installments in FY 2010 and FY 2011.
XL Telecom & Energy also disclosed on Friday that it has raised Rs 23 crore through issue of cumulative redeemable preference shares to banks. It had earlier in June said it has raised Rs 49.2 crore by issuing similar preference shares to banks.
Goldman Sachs’ holding will whittle down once all the outstanding securities get converted into equity.