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JK Paper to raise $50 million from World Bank’s IFC

LiveMint logoLiveMint 23-05-2017 Anuradha Choudhary

Mumbai: JK Paper Ltd is raising about $50 million from the World Bank’s private sector lending arm International Finance Corp. (IFC).

IFC will buy secured non-convertible debentures (NCDs) sold by JK Paper and will also help the company improve its productivity and restructure its balance sheet, IFC said in a statement dated 22 May.

In 2006, IFC invested about Rs50 crore for a 10% stake in JK Paper.

JK Paper produces office papers, packaging boards, printing and writing papers, and speciality papers. The company’s promoter group owns 54.99% of the equity and the remaining is held by the public.

The company is in the process of setting up two plants— JK Paper Mills in Odisha and Central Pulp Mills in Gujarat— at an estimated cost of $100 million. The proposed project consists of capacity and efficiency improvement, capital expenditure at the two existing plants and refinancing of existing debt.

“We are yet to decide how much of the new funds will go towards capex and for refinancing our existing debt, therefore I am not able to give out any number at this point but I can assure that it will help us save a significant amount of finance cost,” A.S. Mehta, president of JK Paper, said in an interview.

“Currently we are operating at 100% capacity and we continue to look at acquisition opportunities in the industry,” Mehta said.

Century Textiles and Industries Ltd (CTIL), a part of the B.K. Birla Group, is in advanced talks to sell its paper business to JK Paper in a deal valuing the paper division at close to Rs5,000 crore in terms of enterprise value, according to a 11 May Mint report, citing unidentified people.

JK Paper is one of the largest producers of paper products in India with a combined capacity of 455,000 tonnes per annum and the deal will help the company strengthen its market position. It is currently the market leader in the branded copier paper segment and among the top two in coated paper and high-end packaging boards.

In November, Mint reported that talks between Bilt Paper and JK Paper to sell two units at Ballarpur and Asthi in Maharashtra had reached a dead-end because of disagreements on valuation. In July, JK Paper made a preliminary non-binding offer to acquire the two factories which make pulp, paper, paperboards and other paper products.

IFC, the private sector lending arm of the World Bank, directly invests in companies in India. It also has an active limited partner (LP) portfolio in India where it backs private equity and venture capital funds focused on India.

Recently, IFC announced it would invest as much as $200 million in India’s largest mortgage lender Housing Development Finance Corp. Ltd by subscribing to five-year NCDs; and an additional $150 million in Bajaj Finance Ltd, subscribing to secured, fixed, rated and listed NCDs. In April, IFC said it planned to invest in Fullerton India Credit Co. Ltd and Capital First Ltd via NCDs.

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