MUMBAI: Chinese conglomerate Jiangsu Longzhe will invest close to Rs 840 crore, or $125 million, to acquire a majority stake in Diamond Power InfrastructureBSE 9.91 %, manufacturer of transmission equipment.
Last week, banks had invoked the strategic debt restructuring (SDR) clause that will help them acquire control of the company and put in place a new management structure by converting debt into equity.
Senior bank officials said Diamond Power told lenders it is in talks with Jiangsu Longzhe Trade & Technology, a conglomerate with interests ranging from education, entertainment to infrastructure. Lenders have exposure of more than Rs 2,250 crore in the company. “The board has received a proposal as mentioned by you.
It’s pending with lenders to grant final approval from their boards,” Diamond Power officials told ET in an email response.
Diamond Power also said the Chinese company would bring in $25 million as equity; the remaining $100 million will be infused as debt. Initially, Jiangsu Longzhe would acquire 26% from lenders. Subsequently, it will raise the stake to 51% through an open offer to public.
As per Sebi norms, a company has to make an open offer if it acquires 26% in a company.
Banks, led by Bank of India, invoked SDR partly to save the account from becoming a nonperforming loan. Under the SDR, lenders have to maintain the account as a standard loan for a period of 18 months.
Diamond promoters, Bhatnagar’s, own 33%; foreign portfolio investors about 15%; and the rest is held by the public. The company’s shares closed 2% lower at .Rs 37 on Friday from the previous day’s close.
The company has been facing financial stress due to a slowdown in the economy and reported .Rs 339 crore loss in the fiscal year ending March 2016 on a revenue of .Rs 2,044 crore.
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