Hindalco to raise rights ratio for $1.2bln offer - srcs

MUMBAI (Reuters) - Hindalco Industries, India's top aluminium maker, hopes to raise $1.2 billion from a rights offering by issuing more shares after a stock market slide soured pricing, three bankers familiar with the deal said. The company needs the money to replace a $3.03 billion bridge loan it had taken to buy Canada's Novelis in February 2007. The remainder will funded through debt and other instruments. Hindalco aims to price the rights offering at 96 rupees ($2.25) a share, lower than initial plans for more than 100 rupees, and make up the shortfall by tweaking the ratio to three rights for every seven held from 1:3 proposed earlier, the bankers said. "A volatile market forced us to push the price lower," said one banker, who declined to be identified as he was not authorised to speak to the media. Officials at Hindalco could not be immediately reached for comment. The company's board is scheduled to meet on Thursday to finalise the price and ratio, the aluminium maker said in a notice to the Bombay Stock Exchange. Hindalco's shares were trading 0.7 percent down at 141.40 rupees by 0524 GMT, while the main BSE index dropped 0.4 percent. The stock has lost 12.5 percent since the rights issue was announced on June 20. The month-long offering is expected to open in September, the bankers said. Share offerings in India have fallen sharply every month since January, when Reliance Power raised a record $3 billion. A quarter percent slide in the BSE share index in 2008 has delayed at least 10 share offerings worth $4.1 billion, Thomson Reuters data showed. The list includes ICICI Securities, a unit of No. 2 lender ICICI Bank, and UTI Asset Management, India's oldest mutual fund, Thomson Reuters data showed. Funds raised through share sales in the first six months of 2008 fell 66 percent from a year earlier to $5.85 billion, the data showed. Citigroup, Merrill Lynch, SBI Capital Markets, Deutsche Bank and ABN AMRO are the advisors to the Hindalco issue. The company will also raise debt and liquidate a part of its treasury investments in bonds and other instruments to close the bridge loan, Chief Financial Officer Sunirmal Talukdar said in June while announcing the rights offer. The bridge loan from ABN AMRO, Bank of America and UBS at 80 basis points over LIBOR expires in November. Bankers said they expected the share offer to cruise through despite weak markets as institutions that collectively hold 28.1 percent of Hindalco had responded positively. The founders, the metals to telecoms Aditya Birla group, own 31.4 percent of Hindalco. ($1 = 42.6 rupees)