A building materials company is planning to raise ?1,200 crore through a structured funding arrangement to partially finance its ?1,800 crore acquisition of a cement business.

The funds will be raised by issuing compulsory convertible debentures (CCDs) and compulsory convertible preference shares (CCPS) in the acquired entity after the deal is completed. These instruments will replace the temporary financing facilities used to fund the transaction and can be converted from debt into equity.

According to company representatives during a recent investor call, ?600 crore of the required upfront amount will be taken as long-term debt on the parent company’s balance sheet, with the remaining amount structured for long-term maturity. An external financial arranger has been appointed to manage the fundraising.

The company did not respond to requests for comment. The funding is being routed through a subsidiary established specifically for the acquisition. After the transaction, this subsidiary is expected to be merged with the acquired cement entity.

The acquired company will raise ?1,200 crore in two phases through a mix of fixed-term securities. These funds will be invested into the company in the form of CCPS and CCDs, which will be repaid upon maturity.

https://www.livehomes.in/news_letter