Tega to raise Rs3.3k cr to fund Molycop deal

Kolkata: Tega Industries will raise Rs 3,300 crore to fund its acquisition of US-based mining equipment-maker Molycop, in consortium with NYSE-listed Apollo which manages funds worth over $840 billion.

The board of the Kolkata-based maker of mining and mineral-processing gears approved raising Rs 4,000 crore on Saturday. The total cost of the acquisition will be over Rs 13,400 crore. Tega will hold 77% stake in the company as well as management control while Apollo will hold the remaining.

Mehul Mohanka, MD of Tega Industries, told TOI that the company will raise Rs 2,300 crore as equity and the remaining Rs 1,000 crore through debt. "The Rs 3,300 crore would be our equity in Molycop, which would be 77%," Mohanka said.

According to Mohanka, the total equity consideration in the acquisition is Rs 4,300 crore with the remaining Rs 9,000 crore debt on the books of Molycop. Apollo will be putting up Rs 1,000 crore in equity and Rs 2,400 crore for debt reduction of Molycop to less than Rs 7,000 crore.

Molycop is a supplier of grinding media to the mining industry. These products are critical to extraction and processing of multiple minerals, specifically copper and gold.