Only 72 hours ago, there was news that Bajaj Hindusthan and Balrampur Chini are all set for a deal. But now, as roadblocks are emerging over how the deal will be structured and what's the right valuation of Balrampur Chini, possibilities of this sweet sugar deal going sour are becoming high.
Call it the bitter-sweet symphony. There are new developments that may actually spoil the mega sugar deal between Bajaj Hindusthan and Balrampur Chini.
The issue is—does Kushagra Bajaj have the cash the buy out the Saraogis from their sugar flagship Balrampur Chini in one go?
With Rs 3000 crore of debt on the books, it seems a tough call for Bajaj Hindusthan.
NDTV learns that this single point is coming in the way of the much hyped sugar deal between the two.
According to sources, Vivek Saraogi, MD of Balrampur Chini was in Mumbai on Monday to discuss the final contours of the deal.
The problem it seems is in the deal structuring and that's why within 72 hours of the news becoming public, the situation has taken a turning for the worst.
The Balrampur promoters want an upfront cash payment for their 37 per cent stake, but the Bajaj Hindusthan management is insisting on a staggered payment.
At Rs 180/share, the deal would mean a cash payout of close to Rs Rs 1700 crore for Bajaj Hindusthan and then it would have also triggered an open offer for another 20 per cent.
Meanwhile, Bajaj Hindusthan, say sources, is trying to raise the cash by diluting their stake and initial talks with a European private equity investor have also begun.
However, it’s clear that unless the cash payment issue is sorted out, the deal may be off.
Balrampur Chini also denied any share sale.
"The promoters of Balrampur Chini Mills have not entered into any agreement with any party for sale of their stake in Balrampur.
However, some discussions were held with Bajaj Hindusthan on future business strategies," a spokesperson of Balrampur Chini said.
There is another issue that needs to get sorted out before the deal gets done—will Kushagra Bajaj also pick up tab for the IMFL business that the Saraogis have begun recently as part of a business extension plan?
The Saraogis also need money as their real estate projects too are going slow. So, will Balrampur just raise money by opting for a private placement?