This story first appeared in DNA Money edition on Thursday, January 19, 2012.
Investment firm Clearwater Capital Partners will be coming out with an open offer for shareholders of Kamat Hotels (I) Ltd (KHIL) to acquire another 26% of the share capital. This has become necessary after the firm exercised its right to convert the final tranche of 5,966 foreign currency convertible bonds (FCCBs).
Clearwater has offered to acquire 4,964,283 equity shares representing 26% of the post-conversion paid-up equity and voting capital at a price of Rs135 per share. The offer will open on March 6 and close on March 20.
KHIL promoters currently hold 51% in the company, which will creep up to 57%, post the merger exercise. The management had earlier said that it’s in the process of merging other promoter-owned businesses, including thehighly profitable restaurant operations and Lotus Resorts, into itself. This, the firm said, would lead to an integration of hospitality and food and beverage verticals, with strategic assets acting as a growth platform.
A successful open offer could give Clearwater Capital Partners (Cyprus) some management control, but that’s easier said than done as the KHIL promoters won’t be in a mood to dilute their holding in the company any further. In such a scenario, Clearwater Capital will only remain a significant minority shareholder.
Clearwater’s decision, according to the management, is positive for the balance sheet of KHIL as approximately Rs93 crore of debt gets converted into equity, besides substantially reducing the interest burden. It will also improve the company’s debt equity ratio from 2.86:1 (before FCCB conversion) to 1.61:1 (post conversion). KHIL’s market cap at conversion price of Rs125 per share will jump by Rs135 crore.
Investment firm Clearwater Capital Partners will be coming out with an open offer for shareholders of Kamat Hotels (I) Ltd (KHIL) to acquire another 26% of the share capital. This has become necessary after the firm exercised its right to convert the final tranche of 5,966 foreign currency convertible bonds (FCCBs).
Clearwater has offered to acquire 4,964,283 equity shares representing 26% of the post-conversion paid-up equity and voting capital at a price of Rs135 per share. The offer will open on March 6 and close on March 20.
KHIL promoters currently hold 51% in the company, which will creep up to 57%, post the merger exercise. The management had earlier said that it’s in the process of merging other promoter-owned businesses, including thehighly profitable restaurant operations and Lotus Resorts, into itself. This, the firm said, would lead to an integration of hospitality and food and beverage verticals, with strategic assets acting as a growth platform.
A successful open offer could give Clearwater Capital Partners (Cyprus) some management control, but that’s easier said than done as the KHIL promoters won’t be in a mood to dilute their holding in the company any further. In such a scenario, Clearwater Capital will only remain a significant minority shareholder.
Clearwater’s decision, according to the management, is positive for the balance sheet of KHIL as approximately Rs93 crore of debt gets converted into equity, besides substantially reducing the interest burden. It will also improve the company’s debt equity ratio from 2.86:1 (before FCCB conversion) to 1.61:1 (post conversion). KHIL’s market cap at conversion price of Rs125 per share will jump by Rs135 crore.
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