The Rs 1,000-crore rights issue of Tata Group's hospitality major, Indian Hotels Company (IHCL), will open on August 4 and a substantial amount of the funds raised will be utilised to repay debt.
The issue will close on August 20, according to the offer document filed by
IHCL with market regulator Sebi.
It will offer nearly 18.2 crore 'compulsorily convertible debentures' for cash at R55 apiece to its existing shareholders on rights basis for an aggregate amount of up to R1,000 crore.
Every investor holding 40 equity shares of IHCL would be eligible to buy 9 'compulsorily convertible debentures' of the company.
As per the offer document, the Tata group firm plans to utilise R552.68 crore from the funds raised towards “full or partial repayment or pre-payment of certain borrowings availed by the company (including redemption premium on non-convertible debentures)”.
Besides, IHCL has proposed to use R127.32 crore for “renovation or refurbishment in some of its existing hotels which include The Taj Mahal Palace, Mumbai”.
It also intends to utilise R70 crore from the proceeds to part fund the construction of its hotel 'Vivanta by Taj' at Guwahati.
“The company proposes to deploy the balance portion of net proceeds aggregating R243.25 crores towards general corporate purposes” the offer document said.
JM Financial Institutional Securities, DSP Merrill Lynch, SBI Capital Markets and Standard Chartered Securities (India) are the lead managers to the issue. Link Intime India is acting as the registrar to the issue.