Hindalco Board okays preferential issue

Hindalco Industries Ltd. said on Friday that its Board of Directors had approved the issue of Preferential Shares / Warrants to the Promoters / Promoters Group, subject to shareholders approval.

The Aditya Birla Group company will issue up to 67,500,000 equity shares of Re1 each totaling up to Rs12bn. It will also issue up to 80,000,000 warrants, amounting to not more than Rs14bn. The warrants are convertible into one equity share against one warrant.

The Board also called an Extraordinary General Meting (EGM) of shareholders on March 28 for obtaining their approval for the preferential allotment.

The relevant date for the purpose of determining the price for the Preferential Issue of the equity shares and warrants would be 30 days prior to the date of EGM, Hindalco said in a statement.

Though Hindalco didn't specify the reasons for the preferential issue n or the size of the issue, the move appears to be aimed at part financing the proposed acquisition of US-based Novelis for US $6bn.

Meanwhile, Novelis reported a US $275mn loss for 2006 because the company was unable to pass along higher costs to customers.