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Blackstone to convert AGL warrants at a discount

19 Sep 09 12:18 PM
ET
MUMBAI: The board of integrated logistics service provider Allcargo Global Logistics (AGL) has approved global private equity fund Blackstone’s
proposal to convert warrants at a 27% discount to the agreed price.

The company’s shareholders will take a final decision on the conversion price at an extraordinary general meeting on October 15.

Blackstone’s offer is to convert warrants, which it subscribed in February last year, into equity shares at Rs 934 apiece against the agreed price of Rs 1,284 per share.

According to the investment agreement, Blacktone is supposed to convert 15.13 lakh warrants into equal number of equity shares of AGL at a price between Rs 934 and Rs 1,284, depending on the performance of the local company.

The warrants are to be converted by September 26, 2009. If the shareholders approve the revised conversion price, Blackstone’s stake in AGL will go up by 6% to 14.99%.

Blackstone holds a 9% stake in AGL and Blackstone India senior MD Akhil Gupta has been on AGL’s board.

“Although AGL’s performance makes it eligible to command the conversion price of Rs 1,284 apiece, Blackstone offered to convert the warrants at Rs 934 apiece, in the wake of the global economic slowdown,“ AGL CMD Shashi Kiran Shetty told ET.

The crash in stock market, post the global financial crisis in October 2008, impacted the AGL stock heavily. The stock came down to Rs 271.85 on October 31. It was at Rs 772 on February 20, 2008 when Blackstone subscribed to the warrants. On Friday, the stock closed at Rs 836.

Mr Shetty said AGL will utilise the funds from Blackstone for its expansion plans, both organic and inorganic.

“We are looking for acquisition opportunities, locally as well as globally, in the LCL (less than container load) cargo segment,” he told ET. LCL refers to collection of cargo from various exporters or importers as opposed to full container for one player. This business offers better margins due to presence of multiple customers. “We see a lot of consolidation opportunities in the LCL segment and will pursue them at the right time and the right price,” he added.

AGL owns and operates container freight stations (CFSs) and Inland Container Depots (ICDs) at JNPT, Chennai, Mundra and Indore. “We now want to develop our land-bank in Nagpur, Hyderabad and Bangalore and convert them into inland container depots at an appropriate time,” Mr Shetty said.

The company remains bullish on this segment and wants to expand to other parts of the country.