Kolkata-based railway wagons manufacturer Titagarh Wagons Ltd has launched a mandatory open offer to buy up to 25.08 per cent equity stake in Cimmco Limited (previously Cimmco Birla) from the public shareholders of the company, according to a stock market disclosure. The open offer has been triggered by an indirect acquisition of majority stake in Cimmco.
Titagarh Wagons has made an offer to buy 5,053,181 equity shares representing 25.08 per cent stake or all public shareholders of Cimmco at a price of Rs 15.5 per share, which will value the transaction at around Rs 7.83 crore ($1.3 million), if fully subscribed.
Shares of Cimmco last traded at Rs 17.64 a unit, up 5 per cent and hitting the upper circuit for the day on the BSE in a weak Mumbai market on Wednesday. The share price has swung sharply over the last one year, more than halving from Rs 25 a share in May 2013 to Rs 10.95 a share in October 2013. It shot up again to Rs 20.95 a share in January only to decline to Rs 13.5 a share last month. It has climbed since then.
If fully subscribed, Titagarh will delist Cimmco. However, the open offer price is less than the current market price and could make the offer void.
Titagarh held 500,000 equity shares or 50 per cent in Cimmco Equity Holdings Private Limited (CEHPL), which in turn owns 74.76 per cent equity holding in Cimmco Limited. The wagons maker also held 64,000,000 Optionally Fully Convertible Debentures in CEHPL, which got converted in to 64,000,000 equity shares, the disclosure showed.
Post conversion, Titagarh Wagons’ shareholding in CEHPL increased to 99.23 per cent stake which makes it an indirect owner of over 74 per cent of public listed Cimmco.
VC Corporate Advisors Pvt Ltd is acting as a manager to the open offer.
Cimmco is into wagon manufacturing and heavy engineering projects /products with its plant located at Bharatpur (Rajasthan). It ended FY13 with revenues of Rs 100.3 crore with net loss of Rs 10 crore.
PE-backed Titagarh Wagons had become a co-promoter in debt-laden Cimmco in early 2010 through capital infusion and providing management support to the company, after the Board for Industrial and Financial Reconstruction approved the rehabilitation scheme for the sick company on March 13, 2010.
Founded in 1997, Titagarh Wagons is engaged in the business of manufacturing of railway wagons, bailey bridges, heavy earth moving and mining equipment etc. It had previously raised PE funding from 2i Capital, ChrysCapital, GE Capital and JP Morgan Partners. The firm went public in 2007.
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