Sesa Goa, an Rs 4,960 crore turnover producer of iron ore and pig iron, has lined up a massive fund raising plan. The company, owned by Anil Agarwal-promoted Vedanta Resources, will seek shareholders approval in an extraordinary general meeting to raise up to Rs 6,000 crore through foreign currency convertible bonds, ADRs/GDRs, qualified institutional placement of equities, non convertible debentures, warrants or any other instrument. Companies take a blanket approval from shareholders giving them the flexibility to raise funds at the right time using the appropriate instrument.
The company has announced the launching of a FCCB issue of Rs 2,400 crore, which will be the first tranche of the Rs 6,000 crore it plans to raise. These bonds will have a coupon rate of 5%, payable semi-annually and can be converted into shares at a price of Rs 347 a share, which is a premium to the reference price of Rs 271, according to the company. Sesa Goa’s share price at present is Rs 262, down by 4%. It will use the funds from this issue for mineral exploration and expand its pig iron and metallurgical coke operations. Goldman Sachs (Asia) LLC and Morgan Stanley & Co are the joint book runners for the issue.
After this issue it can raise another Rs 4,600 crore. Sesa Goa has said that it will increase scale, focus on cost reduction and add to its mineral resources as part of its business strategy. It is investing Rs 605 or $125mn crore to expand its pig iron capacity by 375,000 tonnes, from its existing capacity of 250,000 tonnes. It will also expand its met coke capacity (input for pig iron) and set up a waste heat recovery plant. Sesa Goa’s pig iron business is run by a subsidiary company Sesa Industries. This company was to be merged with Sesa Goa but the merger has been held up due to litigation.