Birla to raise $1bn for Novelis

Mumbai, Sept. 21: The comprehensive financing plan for the repayment of the existing bridge financing for the acquisition of the Canadian aluminium giant Novelis will be ready by November 10 according to Mr Kumar Mangalam Birla chairman, Hindalco. He said that the financing plan envisages funds coming from the rights issue which will open on September 22 for Rs 5,047.70 crore, a loan of $1 billion proposed to be raised by A.V.Minerals (Netherlands), B.V. and the unutilised portion of the previous rights issue amounting to RS 1,789.4 crore. Internal accruals will also be used to fund the loan. Mr Birla was speaking at the 49th annual general meeting of Hindalco in Mumbai on Friday and he had to defend the acquisition of Novelis, which was made in June 2008. Several shareholders were skeptical and critical about the acquisition and they felt that the company would not have had to go for a rights issue if they had not made the acquisition. One of the shareholders said that the rupee was 41 to a dollar when the acquisition was made and today it is Rs 46 and it would add a burden of Rs 1,700 crore on the company. They also wondered how the rights issue would be subscribed when the market sentiment is so negative. Mr Birla assured them that 90 per cent of the rights issue was underwritten so there was no problem. Regarding the rupee he said that realisation in exports will be down but import costs too will come down. About the Novelis acquisition he said Novelis is a market leader across the aluminium chain and it will increase the companys presence in the alumina business as it is also the lowest cost producer. --hkabrein.info