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Stockmarket hotshot Rakesh Jhunjhunwala and his wife Rekha are picking up an 8.37 per cent stake in the city-based Nagarjuna Construction Company Ltd through a preferential offer.
The board of directors of the company, at a meeting in Hyderabad on Monday, proposed to issue 10 lakh (1 million) equity shares of the company at Rs 135 per share to Jhunjhunwala and his wife.
The board decided to issue another 1 million shares to 26 other investors, some of them are said to be associates of Jhunjhunwala, at the same price.
The board also approved in principle the issue of 500,000 share warrants to AVS Raju, the main promoter and chairman of NCC, other promoter directors and investment companies owned by the promoters. These warrants will be converted into an equal number of equity shares at the same price within 18 months from the issue.
The preferential offer will fetch NCC Rs 33.75 crore (Rs 337.5 million), while its paid-up equity will go up to Rs 11.95 crore (Rs 119.5 million) from Rs 9.45 crore (Rs 94.5 million) now. The promoters' stake will come down from 48.80 per cent to 42.80 per cent in the fully diluted equity capital of the company.
The company has called an extraordinary general meeting on January 28 to seek the shareholders' nod for the offer. While the preferential offer price has been set as per the Securities and Exchange Board of India's guidelines, it is 43.60 per cent less than Monday's closing price of Rs 191.40 on the Bombay Stock Exchange.
NCC proposes to use the proceeds from the issue to fund infrastructure projects and to meet long-term working capital requirements. Brindavan Infrastructure Private Ltd, a special purpose vehicle formed by the company in association with the city-based KMC Projects and Mytas Constructions, recently bagged a Rs 250 crore (Rs 2.5 billion) build-operate-transfer project for laying a four-lane highway between Bangalore and Mysore.
"We will be investing about Rs 20 crore (Rs 200 million) in the SPV as our one-third share. The annuity-based project is expected to achieve financial closure by March 2004, and will be implemented two years after that," NCC managing director A Ranga Raju said.