Jain Irrigation Systems said on Tuesday that its global irrigation business will be merged with Temasek-owned Rivulis in a cash and share deal worth Rs 4,200 crore. The combined entity will generate a turnover of 750 million dollars and will be the second world leader in irrigation and climate.
While Temasek will own 78% of the merged entity, Jain International Business will hold a 22% stake worth Rs 1,300 crore (depending on deal value). The cash proceeds will be used by Jain Irrigation to reduce its consolidated debt by around 45% or Rs 2,664 crore, said Anil Jain, Managing Director of Jain Irrigation. About Rs 200 crore of the sale proceeds will come to operations in India.
Jain’s overseas debt includes all restructured overseas bonds up to $225 million and full overseas operating company debt, Jain said. Jain Irrigation will also be able to release its corporate guarantee of Rs 2,275 crore to bondholders and lenders.
The deal is expected to close in three to six months and debt repayments would be made after the deal is reached, Jain said.
Jain will have representative directors and an observer on the board of directors of the merged company. It will also have a long-term supply agreement with the merged entity.
The total debt of Jain Irrigation as of March 31, 2022 stood at Rs 6,000 crore. Its Indian debt was 3,200 crore, of which Rs 1,000 crore was MNT and 2,200 crore was working capital and other small debts.
Temasek was an investor in Jain Irrigation between 2005 and 2010-11, and the two partners would consider working together in the Indian market and that could come in the form of investments in India, Jain said.