Cabinet approves disinvestment of Andrew Yule in Phoenix Yule Ltd

The Union Cabinet today approved the offloading of 26 per cent equity by Andrew Yule & Company Ltd (AYCL) in Phoenix Yule Ltd, a joint venture between AYCL and Phoenix Aktiengesellschaft (AG), Germany (PHX), to Continental Conti Tech for a total consideration of about Rs 62.82 crore, including an additional compensation of Rs 3.69 crore. AYCL, Kolkata, a Central Public Sector Undertaking under the aegis of Department of Heavy Industry (DHI), holds 26 per cent stake in Phoenix Yule Ltd, while the rest is owned by Phoenix Aktiengesellschaft (AG). The Union Cabinet also approved the valuation of shares at the rate of Rs 49.50 per share for 11,943,074 shares of Phoenix Yule Ltd. Briefing newspersons on the outcome of the Cabinet decisions, Information and Broadcasting Minister Ambika Soni said this decision is a follow-up to the Cabinet decision of February 22, 2007, on the issue of restructuring of AYCL. Funds raised by way of disinvestment of AYCL's share in PYL will go towards repayment of a part of interest-free Government of India loan of Rs 87.06 crore, which was extended to AYCL as a part of the restructuring package of AYCL.

Andrew Yule is engaged in manufacture of industrial fans, tea processing machinery, industrial pollution control equipment, system and allied products.

The Belting Division of AYCL was spun off and a joint venture firm with PHX having 74 per cent equity and AYCL 26 per cent equity was formed on November 19, 1998. PYL is one of the largest manufacturers of conveyer belts in India. On January 16, 2007, PHX merged with Conti Tech AG, a subsidiary of Continental AG.

As on the date of transfer, January, 1999, AYCL received Rs 33.99 crore as purchase consideration of 74 per cent of the Firm Value. As per the Joint Venture Agreement (JVA) between AYCL and PHX, if one shareholder wishes to sell all or part of the shares in the JVC after five years from the transfer date, that is, February 1, 1999, it will first offer such shares to the other shareholder in writing.

To implement the decision of the Cabinet dated February 22, 2007, an Inter Ministerial Group (IMG), headed by Additional Secretary & Financial Advisor, DHI was constituted to initiate the disinvestment process of AYCL's entire stake in PYL and to recommend the valuation of share price of PYL as per the terms laid down in JVA signed between AYCL and PHX on November 19, 1998.

-- (UNI) -- 15DI24.xml

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