Fairfax India Holdings Corp is investing more money in Sanmar Chemicals Group in a transaction that will increase its stake to 43%, the investment firm said in a statement.
Fairfax, led by Indian-origin Canadian billionaire Prem Watsa, had first invested in Sanmar in 2016 via a structured transaction that included taking a 30% stake in the company. This also involved a $300 million bond issue, which was due to mature in 2023.
Sanmar has agreed to settle the bond issue at $300 million and pay an additional 13% interest on the principal amount. This works out to $388 million at the end of March 2019, Fairfax said.
Fairfax said it will reinvest about half of what it gets back from Sanmar into acquiring the the company's shares. This will increase Fairfax India’s stake in Sanmar to about 43%.
Fairfax also said that, as a result of this transaction and "positive operational developments" at Sanmar, the firm will record investment gains of about $252 million (Rs 1,830 crore) in the third quarter of 2018. This comprises about $190 million (Rs 1,380 crore) from common shares and $62 million (Rs 450 crore) from bonds, marking an increase in book value per share of $1.62, Fairfax said.
The transaction is subject to customary closing conditions and third-party consents, and is likely to be completed in the first half of 2019, it said.
