State-owned Indian Oil Corp will invest Rs 1,000 crore for raising stake in Chennai Petroleum Corporation Ltd by subscribing to preferential issue.
Shareholders of CPCL have decided to increase authorised share capital of the company from Rs 400 crore (40 crore shares of Rs 10 each) to Rs 1,400 crore, the company said in a regulatory filing.
Through a postal ballot, shareholder agreed "for issue of 100 crore non-convertible cumulative redeemable preference shares of Rs 10 each for cash at par amounting to Rs 1000 crore on private placement preferential allotment basis, in one or more tranche to IOC," it said.
The increased share capital would be by way of creation of 100 crore preference shares
of Rs 10 each. The enhanced share capital of the company would thus comprise of 40 crore equity shares of Rs 10 each and 100 crore preference shares of Rs 10 each.
IOC currently holds 51.89 percent in CPCL, while the other promoter, Iran's Naftiran Inter Trade Company Ltd, owns 15.40 percent.
The preference allotment is being done only to IOC and not to the Iranian firm. CPCL, however, did not say how much will IOC's shareholding in the company increase upon it subscribing to the preference issue.
They also approved raising borrowing limit to Rs 8,000 crore for both domestic and foreign borrowings and to borrow Rs 3,000 crore through a debenture issue on private placement basis to fund expansion plans.