Lloyds Steel Industries Ltd is going for a fresh issue of shares to shore up resources and meet working capital requirements. The public-listed firm is raising Rs 227.5 crore ($45 million) from two non-promoter entities besides its own promoters and will also dilute 7 per cent stake to public sector lender State Bank of India as part-conversion of its debt into equity.
The company plans to issue 49.2 million shares to SBI, 32 million shares to the promoter group firm Shree Global Tradefin Ltd and 81.5 million shares each to two separate non-promoter entities – Ultimate Logistics Solutions Pvt Ltd and Siddharth Holdings Pvt Ltd – the filing adds. The shares will be issued at Rs 11.65 a unit.
On the BSE, shares of Lloyds Steel closed at Rs 12.37, down 6.50 per cent from the previous close.
Asset Reconstruction Company of India Ltd (Arcil) held 11.64 per cent stake in the company as of December 31, 2011. However, this will get diluted to around 7.3 per cent after the preferential allotment.
Promoters’ holding will also come down from 49.5 per cent to 36.12 per cent. The two non-promoter entities, each investing around Rs 95 crore ($19.5 million), will together own around 24.5 per cent in the company. The parentage of the two investment entities could not be immediately ascertained.
However, certain media reports linked these two entities to Miglani family of Uttam Galva, a public listed firm co-promoted by Miglanis along with the world's largest steel producer Arcelor Mittal. If that is indeed the case, Miglanis are investing Rs 190 crore to acquire a stake just short of the trigger point for making a mandatory open offer for further 26 per cent stake in the company.
Lloyds Steel manufactures and markets iron & steel products and capital equipment in India. Its product range includes hot rolled coils, sheets and plates; cold rolled full hard coils and sheets, and various other steel products. The company has a manufacturing capacity of 1 million tonnes per annum.