Zuari Agro Chemicals Ltd (ZACL) based at Zuarinagar-Sancoale is set to change hands with the company revealing sale of the fertilizer division and associated businesses to Paradeep Phosphates Ltd for a total consideration of $ 280 million.
The company disclosed the information as part of the mandatory disclosure to the stock exchanges, the BSE and the NSE, under Regulation 30 of SEBI (listing obligations and disclosure requirements) Regulations, 2015.
The disclosure notice states that the board of directors at the meeting on February 22 granted in-principle approval for sale of the fertilizer and associated businesses to Paradeep Phosphates (PPL), “as a going concern on a slump sale basis for an agreed enterprise value of $ 280 million as defined in the business transfer agreement with PPL.”
The notice adds that the sale is subject to approval of the shareholders, other regulatory and statutory approvals and financial due-diligence.
ZACL expects the business transfer agreement to be executed this month while the estimated deadline for the deal to be signed in writing between the two parties is June 30, 2021.
The sale value of $ 280 million is after customary adjustments for capex, cash, debt, cash-like items, debt-like items and working capital changes.
In 2019-20, the fertilizer division of ZACL made revenue of Rs 1,990 crore which was 98.9 per cent of the total turnover of the company. The turnover of the company was Rs 2012.6 lakh and the loss was Rs 189 crore.
Paradeep Phosphates is a group company of ZACL and “the sale transaction would fall within related party transactions and is being done at arm’s length basis,” said the
ZACL manufactures bulk fertilizers and Paradeep Phosphates is engaged in the manufacture of di-ammonium phosphate (DAP), complex fertilizers of NPK grades, and zypmite (gypsum-based product), etc.
The purpose of the sale is consolidation of bulk fertilizer operations, said ZACL.