Ballarpur Industries, India’s largest paper manufacturing company has agreed to sell its stake in the loss making Malaysian paper company Sabah Forest Industries for $500 million.Bilt, which acquired the Sabah Forest Industries in 2007 for $500 million in one of its largest cross border acquisitions has decided to liquidate its holding following the approval from stakeholders to sell 98.08%.
Ballarpur Industries today said its subsidiary Ballarpur Paper Holdings BV will sell entire 98.08 per cent stake in its Malaysian arm Sabah Forest Industries (SFI) for $500 million (about Rs. 3,307 crore). The sale proceeds will be used for retiring the debt of its group companies.
“Ballarpur Paper Holdings B.V., a step down subsidiary of the company and holding company of SFI (BPH), has signed a share sale agreement (SSA) with Pandawa Sakti (Sabah) Sdn. Bhd., Malaysia, a subsidiary of Pandawa Sakti Sdn. Bhd. Malaysia, and Pandawa Sakti Sdn. Bhd. (guarantor) for sale of its entire equity stake of 98.08 per cent in SFI, at SFI’s enterprise value of $500 million on a cash-free debt-free basis,” Ballarpur Industries said in a BSE filing.
The transaction is subject to adjustments as on the date of closing relating to debt, working capital, currency fluctuation and cash & cash equivalents, it added. “The completion of transaction is subject to necessary regulatory approvals of the Government of Malaysia, SFI lenders and completion of certain obligations by the Purchaser, as per SSA,” it said. On the use of funds, the company said: “Significant part of the consideration is proposed to be used for debt reduction at the level of SFI, Bilt Paper B.V. and Bilt Graphic Paper Products Ltd.”
Ballarpur Industries said the deal completion is expected to take place within three months from the date of signing. Shares of Ballarpur Industries were trading at Rs. 16.25 apiece, up 9.06 per cent, on the BSE.