Kesoram set to prepay around Rs 1,500-crore high-cost debt
Kesoram Industries, which announced merger of its cement business with UltraTech Cement, is set to prepay around ₹1,500 crore of high-cost debt borrowed at 20% from Goldman Sachs, Cerberus and Edelweiss.
«The three funds — Goldman Sachs, Cerberus Capital Services and Edelweiss — are set to be paid ahead of maturity as UltraTech is rated AAA and the cost of borrowing is much cheaper,» a person with knowledge of the matter said on condition of anonymity.
As part of the merger deal, UltraTech Cement will issue one share for every 52 shares of Kesoram Industries. The total value of the deal includes a debt of about ₹1,700 crore, according to a Motilal Oswal report.
The enterprise value of Kesoram Industries is ₹7,600 crore.
In March, Kesoram Industries had mandated IndusInd Bank to refinance the high-cost debt and was in talks with private credit funds. Now, following the acquisition, the debt is expected to be refinanced by banks at a much lower rate, said people in the know.
A Kesoram Industries spokesperson did not respond to a request for comment.
Kesoram faced financial challenges and defaulted on interest payments in January 2020.
In March 2021, it raised ₹2,060 crore by issuing bonds to funds such as Goldman Sachs, Sarvara Investment Fund, Cerberus Capital Services, Edelweiss India Special Situations Fund and ECL Finance. The company has been repaying a portion of the non-convertible debentures (NCDs).
As of October 6, it prepaid part of senior secured NCDs, leaving ₹1,487 crore outstanding.
In the first half of 2023-24, Kesoram Industries achieved a sales volume of 3.73 million tonnes compared to 3.19 million tonnes a year ago.
