Nuvoco Vistas is set to secure ₹1,200 crore through a structured funding mechanism to partially finance its ₹1,800 crore acquisition of Vadraj Cement.
The funds will be generated by issuing compulsory convertible debentures (CCDs) and compulsory convertible preference shares (CCPS) in Vadraj following the acquisition’s completion, replacing the bridge facilities utilized for the transaction, according to sources familiar with the situation.
These financial instruments provide the option to convert debt into equity. “From the total ₹1,800 crore required for upfront financing, we will record a long-term debt of ₹600 crore on Nuvoco’s balance sheet, while the remaining ₹1,200 crore will be raised through instruments such as CCDs and CCPs, which will have a long-term maturity,” the management stated during a recent investor call.
Trust Capital has been appointed as the arranger for this fundraising initiative. Nuvoco has not yet responded to a request for comment. The funding process is being carried out in two main phases. Initially, Nuvoco is securing a combination of bridge financing and long-term debt, which will be allocated to its subsidiary Vanya for the acquisition of Vadraj Cement.
Following the acquisition, Vanya is anticipated to merge with Vadraj. Vadraj plans to access the market to raise ₹1,200 crore in two phases, utilizing a mix of fixed-term securities that include structured call and put options. Investors will contribute to Vadraj through CCPs and CCDs with long-term maturities, and upon maturity, the company will repay these instruments. The proceeds from this second phase will be allocated to refinance the short-term debt.
