According to reports, Mohan Breweries and Distillers Ltd will raise Rs 1,500 crore through debt and equity instruments for its entry into power sector through a 100 per cent subsidiary, Mohan Power Ltd.
Listed Mohan Breweries has opted for hybrid securities through placements overseas by a major US fund house.
The fund raising activity will begin in the later part of September by venture capital fund Exhilway Global Opportunities Fund L.P.
The exercise is being advised by US firm’s Indian arm Exhilway Capital Advisory.
The debt instruments will be at 250 basis points over LIBOR.
“However, the final cost is subject to the credit rating, which is under way.
The net yearly interest cost will be 4.5 a year,” said Rahul Sahay, Director of Investments of Exhilway in India.
Exhilway expects AA or AAA rating for the Mohan Breweries instruments.
“The money will be raised for a 10-year period. For the first year, INR/dollar conversion is locked at Rs 59. The company will revisit this figure every year,” Sahay said.
Mohan Breweries, which now generates 38 MW wind energy, will start the separate initiative with Rs 1,120 crore and 115 MW solar power project in Madurai, Tamil Nadu.
According to the project document, 5 MW power generation will be for captive use and 110 MW will be sold to Tamil Nadu Electricity Board (TNEB).
The cost of installation of 1 MW as turnkey basis is estimated at Rs 9.50 crore a 20-year warranty and a 25-year guarantee.
Eighty per cent of the project cost is to be funded through borrowing/PE/NCD and the balance will come from its own funds.
The equity base and the debt ratio of the new power subsidiary, however, was being finalised, sources said.