The money will be raised by issuing compulsory convertible debentures (CCD) and compulsory convertible preference shares (CCPS) in Vadraj after the completion of the acquisition and will replace the bridge facilities taken to fund the deal, people familiar with the matter said. These instruments offer a feature to convert debt into equity. “Out of this ₹1,800 crore of financing which we need to do upfront, we will take a long-term debt of ₹600 crore in Nuvoco’s books and then the balance ₹1,200 crore will be through instruments like CCDs and CCPs which will be on a long-term maturity,” the management said during a recent investor call. The company has hired Trust Capital as the arranger for the fundraising.
Nuvoco did not respond to a request for comment. The funding is being executed in two broad steps. In the first phase, Nuvoco is raising a mix of bridge financing and longer-tenor debt, which will be infused into its subsidiary Vanya for the purpose of acquiring Vadraj Cement. After the acquisition, Vanya is expected to be merged into Vadraj.
Vadraj will tap the market to raise ₹1,200 crore in two tranches, which will be in the form of a combination of fixed-term securities with structured call and put options. The company will have investors who will invest into Vadraj in the form of CCPs and CCDs with a long-term maturity and at the time of maturity they will repay the CCPs and CCDs.
Proceeds from this second leg will be used to refinance the short-term debt.
