GIC, the investment arm of Singapore government, and JP Morgan are together picking up 21% equity stake in Ballarpur Paper Holdings (BPH), a Dutch step-down subsidiary of paper producer Bilt, in a deal valued at $175 million (Rs 700 crore).
With this, BPH, intended to be the holding arm of the entire commodity paper business of Bilt, would be valued at $825 million or around Rs 3,300 crore.
Significantly, this would be higher than the current market capitalisation of Bilt, which is valued at Rs 2,640 crore. Besides commodity paper, Bilt has exposure in consumer-focussed retail products and higher value-added paper products.
The PE deal for BPH is part of the corporate restructuring plan announced a few months ago where Bilt said it would hive off the commodity paper business in India into a separate wholly-owned subsidiary. This business would raise resources for retiring the debt on the books of Bilt, apart from raising funds required for the capital restructuring programme.
As part of the restructuring plan, Bilt would first split the face value of its share from Rs 10 per share to five shares of Rs 2 each. Thereafter, it would go for a compulsory 40% buyback of equity holding from each of its shareholders, which would reduce the total outstanding shares even as the equity holding structure of the shareholders in percentage terms would remain intact.
BPH, which was created as a special purpose vehicle for the acquisition of Malaysia’s largest paper and pulp company Sabah Forest Industries (SFI) last year, owns 97.8% of the capital in SFI and the balance 2.2% is held by the government of Sabah, which is a province in Malaysia. In addition, it is planned that BPH would acquire the commodity paper business of Bilt in India.
Source: Economic Times