Parag Milk Foods Ltd, a dairy-FMCG company, plans to raise a total of ₹316 crore through preferential issuance of shares, Foreign Currency Convertible Bonds (FCCB) and convertible warrants.
The fund-raising is subject to shareholder’s approval at the EGM scheduled on April 26 and other regulatory approvals.
“We are looking at replacing our short-term working capital limits by NCDs, where there is a two-year moratorium, as well as reduce the overall debt burden. The funds that will be raised through FCCB will be utilised for meeting our capex requirements over the next two years and would free-up our cash flows during that period,” Parag Milk Foods Chairman, Devendra Shah, said.
“Additionally, the proceeds of preferential shares and warrants would be utilised to reduce short-term debt limits and enhance working capital for future growth. This would provide enough firepower to bolster the balance sheet and propel the company for future growth,” he added.
Of the total ₹316 crore, International Finance Corporation (IFC) has proposed to invest up to ₹155 crore by subscribing to preferential issue, FCCBs and NCDs (of ₹150 crore committed in December). The proposed investment includes a preferential allotment of 67.57-lakh shares at a price of ₹111 (including a premium of ₹101 per share) for a total of ₹75 crore. IFC would subscribe FCCBs totalling $11 million by private placement at a conversion price of ₹145 per share with a five-year maturity to redemption.
Sixth Sense Venture Advisors LLP, a domestic, consumer-centric venture fund, has proposed an investment of ₹50 crore through preferential allotment of 45.05 lakh shares at ₹111.
The promoters will also ₹111 crore, that includes a preferential allotment of 50 lakh convertible share warrants at ₹111. Following the investments, the promoter holding in the company would be maintained at 46 per cent.
“We believe the Indian branded dairy space will get deeper with consumers migrating from the unorganised (75 per cent currently) to the organised space, across product segments,” Nikhil Vora, Founder and CEO of Sixth Sense Ventures, said.