With its stock taking a severe hit after it announced plans for the Rs 14,500-crore buyout of US-based Cooper Tire & Rubber Co, Apollo Tyres today sought to assure investors that the deal will not load its Indian operations with excessive debt.
The company’s shares had plunged to 52-week low of Rs 67.75, down by 26.35 per cent on BSE during yesterday’s trading on debt concerns due to the deal. It had closed at Rs 68.60, a loss of 25.43 per cent over previous close. Today Apollo Tyres shares ended at Rs 64.75 down 5.61 per cent from yesterday’s close.
“Apollo India has not taken all the loan of $2.5 billion. It has only taken a loan of $450 million, this is what the financial structure is,” Apollo Tyres Vice Chairman and Managing Director Neeraj Kanwar told reporters here.
Elaborating the funding structure for its proposed acquisition of Cooper, he said Apollo group has taken debts at two levels -- $450 million by Apollo India and $2.1 billion of overseas debt on cash flows of Cooper and Vredestein.
The debt from the Indian arm will be partly offset by the recent sale of the South African business to Sumitomo Rubber Industries in a deal valued $60 million, he said. Kanwar further said out of the $2.1 billion overseas debt, $1.9 billion would be raised through bond market in the US and rest USD 200 million would come from asset based loan.