Raipur Alloys Board approves merger of CECL and RGPL with the company

Raipur Alloys & Steel Ltd has announced that the Board of Directors of the Company, Chhattisgarh Electricity Company Ltd (CECL) & Raipur Gases Pvt Ltd (RGPL) at its meeting held on September 29, 2006, has considered and approved the proposal of Merger of CECL and RGPL with the Company w.e.f. April 01, 2006, subject to the approval of shareholders and lenders of respective Company and also the stock exchange, the High Court of Judicature at Bombay - Nagpur Bench and the High Court of Chhattisgarh and all other requisite permission, sanctions and approvals.

CECL is having a thermal power plant of 50 MW and Ferro Alloys plant having 5 furnaces of 9 MVA each and is a leading producer and exporter of manganese based Ferro alloys in the country. The Company supplies wast heat / steam to CECL & buys ferro alloys & power from CECL. CECL has also been allotted captive coal mine.

RGPL is having an Oxygen Plant. It was supplying oxygen to EAF steel plant of the Company, as an auxiliary Unit. However, the said Oxygen Plant is presently closed.

As per the proposed scheme of merger, the Company shall issue and allot its fully paid up equity shares of Rs 10/- each:

i) to the shareholders of CECL in the ratio of 91 shares of the Company for every 10 equity share(s) of the face value of Rs 10 each fully paid up and held by them, entailing an issue of 1,95,65,000 equity shares of the Company.

ii) to the shareholders of RGPL in the ratio of 1 share of the Company for every 117 equity share(s) of the face value of Rs 100/- each fully paid up and held by them, entailing and issue of 139 equity shares of the company.

The above share exchange ratio is based on the relative valuation of all the Companies made by M/s Haribhakti & Co., a leading firm of Chartered Accountant.

The proposed scheme further envisages cancellation of 3072804 equity shares of Rs 10/- each of the Company held by CECL.

The proposed scheme also envisages transfer of leasehold rights of lands / plots taken on lease from Chhattisgarh State Industrial Development Corporation on which closed mini steel plant of the Company and closed oxygen plant of RGPL are installed, to a wholly owned subsidiary of the Company.

As a results of the merger, the issued and paid up equity share capital of the Company shall stand increased from Rs 13,08,00,000/- divided into 1,30,80,000 equity shares of Rs 10/- to Rs 29,57,23,350 divided into 2,95,72,335 equity shares of Rs 10/- each subject to the scheme being approved by all concerned.

The proposed merger will give benefit of operational synergies and fully integrate the operations. It will add value to all the stakeholders in the form of a much more stronger and integrated entity.

Source : Equity Bulls

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