Singapore-headquartered agribusiness major Wilmar International Ltd is in the final stage of negotiations to buy up to 25 per cent stake in India's largest sugar manufacturer Shree Renuka Sugars, The Economic Times reported citing sources.
The deal, which would help Wilmar expand its footprint in India and Brazil, will enable Shree Renuka Sugars to cut its debt pile. The company had loaded debt when it went about striking acquisitions in Brazil, the world’s top sugar producing nation.
Shree Renuka Sugars is expected to issue fresh shares through a preferential allotment which would be made at around Rs 30-35 per share, according to the news report. This would be a significant premium to the market price of the listed firm and at the rumoured issue price the deal would be valued over $100 million.
The company’s scrip was quoting at Rs 21.80 a share, up around 4.81 per cent on the BSE in a weak Mumbai market on Tuesday.
Shree Renuka Sugars is a global agribusiness and bio-energy corporation and led by Murkumbi family which currently owns 38.86 per cent stake in the company. Post preferential allotment to Wilmer the promoter holding will shrink too around 30 per cent.
Shree Renuka Sugars reported a loss of Rs 374 crore on revenues of over Rs 10,000 crore in the year ended March 31, 2013. Its standalone losses were Rs 184 crore in the six months period ended September 30, 2013.
The firm purchased controlling stake in Equipav SA Acucar e Alcool (now renamed as Renuka Do Brasil) for Rs 1,530 crore in 2010 and later hiked its stake to 60 per cent. It also acquired another firm in Brazil which is now run as Renuka Vale do Ivai S/A (VDI).
It was earlier looking to sell its Brazilian assets but is said to have dropped the idea as Wilmar evinced interest in investing in the company.
Wilmar is one of Asia’s leading agribusiness group and its business activities, include oil palm cultivation, oilseeds crushing, edible oils refining, sugar milling and refining, specialty fats, oleochemicals, biodiesel and fertilisers manufacturing and grains processing.
(Edited by Joby Puthuparampil Johnson)