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Mumbai June 20 A rights issue of up to Rs 5,000 crore, domestic or international debt financing and liquidation of treasury form part of a finance plan unveiled by Hindalco Industries Ltd on Friday to refinance a $ 3.03-billion bridge loan it had taken to acquire Canadian aluminium maker Novelis last year.

“This take out financing will be in place by November 10, 2008,” Mr. D. Bhattacharya, Managing Director of Hindalco and Vice-Chairman of Novelis, told presspersons on Friday.

As part of the take out financing, the company’s directors approved the issue of equity shares for an amount not exceeding Rs 5000 crore to existing shareholders on rights basis. The share ratio for the rights issue will be 1:3—that is one right of Re 1 each for every three equity shares of Re 1 each held by the shareholders as on the record date.

“The price per share for the rights issue would be decided by the board and announced at a later date,” Mr. Bhattacharya said.

Last year, Hindalco had acquired aluminium maker Novelis for $ 6 billion, for which it had taken a bridge loan of $ 3.03 billion. After the acquisition in May last year, Hindalco, the flagship company of the Aditya Birla group has emerged as a global player in the aluminium market, with a presence in five continents and with a new product portfolio.

While the rights issue would raise a little over $ 1 billion, the balance of about $ 2 billion of the bridge loan will be repaid by sourcing domestic or international debt financing and liquidation of treasury.

The company is sitting on a treasury surplus of $ 1 billion.

Mr. S. Talukdar, the company’s CFO, however, said the company would not use the entire treasury surplus as part of the take out financing. “We are also pursing the international bond option, despite there being some uncertainty,” he said.

Novelis reported a net profit of $ 28 million for the period May 16 2007 to March 31, 2008, as against a loss of $ 265 million in 2006-07.

While Novelis produced products in the top end of the chain, Hindalco focuses on the bottom end of the product chain.

“Where we get the benefits of synergy are in areas like IT and risk management,” according to Mr. Bhattacharya.

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