Actis-controlled lighting products maker Halonix Ltd (formerly Phoenix Lamps) has set in motion its plan to sell its loss-making general lighting business and will soon seek shareholders’ approval to transfer the division to a subsidiary called Halonix Technologies Ltd, ahead of the sale. The proposal was cleared by the board in a meeting last Friday (April 12, 2013).
This comes within two months of the firm disclosing such plans, which means a revival of its proposed move earlier – that of selling the general lighting business while retaining the automotive lighting unit.
The valuation of the slump sale to the subsidiary will be the average of the fair value of the general lighting business, arrived at through the discount cash flow method as on Dec 31, 2012, as determined by two independent valuers.
Halonix manufactures halogen lamps for automobiles, including two & three-wheelers, passenger cars, commercial vehicles and off-road applications. It is also in the business of branded general lighting, mostly compact fluorescent lamps (CFLs).
The general lighting business, which competes with Philips, Havells and Osram, among others, constitutes around 60 per cent of the company’s revenues, but it happens to be a loss-making business. Therefore, selling it will enable the firm to become a focused automotive lighting company. The auto lighting business is profitable but the company, as a whole, has been in the red due to its general lighting unit.
Private equity firm Actis, which struck a number of control deals in India, had acquired a majority stake in the company way back in 2006-07 with a final tranche of 20 per cent stake through an open offer – taking its holding to 66 per cent.
Halonix scrip shot up 19.9 per cent in a strong Mumbai market on Monday after the announcement and last traded at Rs 37.35 a share. The open offer was made at Rs 190 a share and Actis’ investment is deep underwater.
Earlier, in July 2010, the firm decided to sell the lighting business to Actis. However, the deal was scrapped and the company decided to continue with both automotive and general lighting as two separate and distinct lines of business.
At that time, too, the company decided to first hive off the general lighting business to a subsidiary, Halonix Technologies, and then sell the shares of the subsidiary to Actis. The firm has not disclosed if Actis will be involved in the transaction on this occasion.
Last October, Halonix acquired Luxembourg-based International Lamps Holding Company SA for an undisclosed amount.
(Edited by Sanghamitra Mandal)