Port of Antwerp International (PAI) has agreed to pick up a four per cent equity stake in Essar Ports Ltd for Rs 175 crore.
According to an agreement signed between the two companies on Wednesday, PAI, the international investing arm of the Port Authority of Antwerp, will subscribe to the Global Depository Receipts of Essar Ports. The issue price works out to Rs 100 a share underlying the GDR, the company said in a notice to the stock exchanges.
Each GDR represents 331 equity shares of Rs 10 each. Essar Ports' shares ended almost flat at 89.30 on the BSE on Wednesday.
PAI's investment in the Indian company is part of a long-term strategic alliance signed between Essar Ports and Port of Antwerp International on Wednesday, said Mr Rajiv Agarwal, Managing Director, Essar Ports.
Following today's agreement, Mr Jan Adam, CFO of Port of Antwerp, will join the board of Essar Port as a non-executive Director.
Second largest in Europe
Antwerp, the second largest port in Europe, handled 187 million tonnes of cargo last year.
Essar Ports is a listed private sector company having two operational ports and a couple of other on-going projects. The annual cargo handling capacity of 88 million tonnes is expected to go up to 158 million tonnes by 2014.
Promoters currently hold about 85 per cent stake in the company, which is required to be diluted by 10 cent by June next year.
Today's deal follows an MoU signed by the two companies two years ago. According to the agreement, Antwerp Port will assist Essar on training, port planning and offer other technical services. Both will also work on increasing the traffic flow between Antwerp port and the ports run by Essar.
Currently, captive cargo accounts for nearly 98 per cent of the traffic handled by Essar ports. The company hopes to increase the share of third-party cargo to 25 per cent in the next two years.
Financial performance
Essar Ports said that despite a 60 per cent increase in operating income, it suffered a net loss of Rs 61.5 crore for the fourth quarter as it paid back Rs 235 crore interest dues on the restructured debt.
For the full year, the company posted a net profit of Rs 63.9 crore. Revenue increased by 45 per cent to Rs 296.63 crore in the fourth quarter.