Jain Irrigation Systems on Tuesday said that its global irrigation business will be merged with Temasek-owned Rivulis in a cash-and-stock deal worth Rs 4,200 crore. The combined entity will have a revenue of $750 million and will be the second largest global irrigation and climate leader.
While Temasek will hold 78% in the merged entity, Jain International Business will have a 22% stake worth Rs 1,300 crore (according to the deal value). The cash proceeds will be used by Jain Irrigation to reduce its consolidated debt by around 45% or Rs 2,664 crore, Anil Jain, managing director, Jain Irrigation, said. Around Rs 200 crore from the sale proceeds will come to the India operations.
Jain’s overseas debt includes all the restructured overseas bonds to the tune of $225 million and complete debt of overseas operating companies, Jain said. Jain Irrigation will also get to release its corporate guarantee of Rs 2,275 crore to bondholders and lenders.
The deal is expected to close in three to six months and debt repayments would be made after closing the deal, Jain said.
Jain will have representative directors and observer on the board of the merged company. It will also have a long-term supply agreement with the merged entity.
Jain Irrigation’s total debt as of March 31, 2022, stood at Rs 6,000 crore. Its India debt was at `3,200 crore, of which Rs 1,000 crore was NCDs and `2,200 crore of working capital and other small debt.
Temasek was an investor in Jain Irrigation between 2005 and 2010-11, and both partners would explore working together in the Indian market and this could be in the form of investments in India, Jain said.