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Dunlop raises $90 mn in debt from hedge funds

Ruia group's Dunlop India Ltd has raised $90 million (Rs 360 crore approx) from a clutch of offshore hedge funds to restructure loan and to meet other corporate needs in a structured deal which offers them an option to pick up to 15 per cent stake in the tyre maker's paid-up capital.

“We have recently signed a deal with a clutch of offshore hedge funds headed by Spinnakar Capital Group to raise USD 90 million in loans. We have also raised Rs 121 crore in Rupee loan from Deutsche Bank,” Dunlop Chairman Pawan Kumar Ruia said.

The loan was raised by the Mauritius-based holding company of Dunlop and Falcon Tyres, Dil Rim and Wheel (DRW), which bought both the company from Chabbrias' at a total consideration of Rs 200 crore.

To facilitate the loan, DRW has gone into some structural change with the assets of the company. Dunlop transferred its 'non-core' assets into two subsidiaries and shares of these two units were pledged to two other firms controlled by DRW, which in turn had been pledged to Spinnakar Capital.

In simple terms, only the non-core assets of Dunlop are now pledged with the offshore lender. The non-core assets of Dunlop do not include plant and factories of Dunlop at Shahagunj and Ambattur and are valued at about Rs 900-1,000 crore after revaluation, according to a company official.

Manufacturing facilities at Shahgunj and Ambattur alone were revalued at Rs 1,072 crore.

Meanwhile, Ruia said the company has submitted a proposal with West Bengal government for an IT SEZ at Shahagunj facility in the excess land. He, however, did not elaborate on the subject.

Source: Economic Times

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