SAL Steel Limited has announced a significant corporate action, allotting equity shares and convertible warrants to Sree Metaliks Limited on a preferential basis. This move signals a potential shift in the company's ownership structure and an infusion of fresh capital.

Details of the Allotment

The Board of Directors of SAL Steel approved the following allotments to Sree Metaliks Limited:

Key Points of the Transaction

1. Equity Shares: The company has allotted 1.93 crore equity shares at ₹18.00 per share, which includes a premium of ₹8.00 per share.

2. Convertible Warrants: 3.58 crore warrants have been issued, each convertible into one equity share within 18 months from the date of allotment.

3. Warrant Subscription: Sree Metaliks has paid ₹4.50 per warrant (25% of the issue price) as the initial subscription amount, totaling ₹16.09 crore.

4. Capital Structure Change: Following this allotment, SAL Steel's paid-up equity share capital has increased from ₹84.97 crore to ₹104.22 crore.

5. Potential Ownership Shift: Upon completion of the transaction and open offer, Sree Metaliks is set to be classified as a promoter of SAL Steel, while the existing promoters will cease to hold that status.

6. Post-Issue Shareholding: Assuming full conversion of warrants, Sree Metaliks is expected to hold a 37.99% stake in SAL Steel.

Regulatory Compliance

The allotment adheres to various regulatory requirements:

• It follows the approval of SAL Steel's shareholders.
• The securities are subject to lock-in restrictions as per SEBI regulations.
• The equity shares will be credited to an escrow account in compliance with SEBI's Substantial Acquisition of Shares and Takeovers Regulations.

Market Implications

This preferential allotment represents a significant development for SAL Steel, potentially impacting its financial structure and strategic direction. The infusion of ₹99.00 crore, when fully realized, could provide the company with additional capital for growth initiatives or debt reduction.

Investors and market participants will likely monitor how this change in ownership structure might influence SAL Steel's future business strategies and performance in the steel sector.

As the transaction progresses, further details on the open offer and the completion of the share purchase agreement will be crucial for understanding the full impact of this corporate action on SAL Steel's future.

SAL Steel Limited, a major player in the manufacturing of Direct Reduced Iron, Ferro Alloys, and Iron Ore pellets, is the target of a significant open offer by Sree Metaliks Limited.

Open Offer Details

The open offer, valued at approximately ₹94.09 crore, aims to acquire up to 3,76,39,342 fully paid-up equity shares of SAL Steel at a price of ₹25.00 per share. This represents 26% of the expanded share capital of SAL Steel.

Background of the Acquisition

The open offer follows a series of strategic agreements between Sree Metaliks, SAL Steel, and its current promoters:

1. Share Purchase Agreement (SPA): Sree Metaliks has agreed to purchase 4,29,59,495 equity shares from the current promoters of SAL Steel at ₹25.00 per share, totaling ₹107.39 crore.

2. Share Subscription Agreement (SSA): SAL Steel will issue 1,92,50,000 new equity shares and 3,57,50,000 convertible warrants to Sree Metaliks on a preferential basis.

Impact on Shareholding

Upon completion of these transactions and assuming full acceptance of the open offer, Sree Metaliks is poised to hold a substantial 96.98% stake in SAL Steel, signaling a significant change in the company's ownership structure.

Strategic Implications

This acquisition is expected to strengthen Sree Metaliks' presence in the steel industry and potentially improve operational efficiencies. The company has expressed its intention to continue SAL Steel's existing business operations while exploring opportunities for diversification and improvement.

Management Changes

Following the completion of the first tranche of share purchases, the current promoters of SAL Steel will cease to be in control of the company. Sree Metaliks will acquire control, and the existing promoters will be reclassified from 'promoter' to 'public' shareholders.

Offer Timeline

Key dates for the open offer include:

Conclusion

This open offer marks a significant development in the Indian steel industry, potentially reshaping the competitive landscape. Shareholders of SAL Steel now have an opportunity to evaluate this offer in light of the company's future prospects under new management.

Investors and industry observers will be keenly watching how this acquisition unfolds and its impact on the broader steel sector in India.