JIK Industries financial restructuring plan gets High Court clearance 2/1/2006 6:08:20 PM IST JIK Industries Ltd's proposal for its financial restructuring has now got the green signal from the Honorable High Court of Bombay. The Company proposed a scheme of arrangement with Fixed Deposit Holders, Non-Convertible Debenture Holders and other unsecured Creditors, u/s 391 of the Companies Act, 1956.The meeting of creditors was convened and scheme was passed in favor of converting the debt into equity shares (face value of Re1 with a premium of Rs2 per share). The total conversion of debt under the scheme is Rs296.8mn. This scheme led to an expansion in the company's equity base by approximately Rs100mn with simultaneous debt reduction of approximately Rs300mn. The company, which was once in Bombay Stock Exchange 500 Index, was going through a bad patch for last couple of years.The scheme was passed with thumping majority and the creditors were agreeable to take shares of face value Re1 at a premium of Rs2, reposing faith in the company, the management and the future plans of the crystal business.The scheme benefits all the stakeholders of the company. The scheme benefits the company as the debt structure is better aligned with the operations of its extremely promising crystal business.This dual benefit in form of reduced debt burden and interest cost will help the company immensely by approx. Rs300mn and simultaneously adding Rs300mn to its net worth. This in turn would benefit the new shareholders too (FD, NCD and unsecured creditors) who would not only see recovery of their dues but also may gain substantial profits if the share price were to exceed issue price. This has immense benefit to new and existing shareholders of a financially healthy company.In July '04 a major accident at the chemical plant caused heavy damages resulting in a complete closure of the plant. Reviving the business becomes unviable. In view of the aforesaid developments, the management decided to discontinue the chemical business. In August 2004, the compound wall of Clariant India Limited (Color Chem) collapsed and fell inside the company's crystal glass plant at Balkum, Thane damaging the gasoline and compressed air pipelines resulting in further damages to the furnaces. Due to this incident the company was forced to halt the activity
its low for the past 8-9 months has been 2......so it can be taken as a stoploss if one decides to take position in it.....arnd max 15% downside frm here considering the stoploss of 2
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