Sadbhav Infrastructure Project to merge with Sadbhav Engineering
The board of directors of Sadbhav Engineering (SEL) and Sadbhav Infrastructure Project (SIPL) have approved the merger of Sadbhav Infrastructure into Sadbhav Engineering, according to their exchange filings. Sadbhav Infrastructure is the subsidiary of Sadbhav Engineering.
This amalgamation will be carried on in consideration of equity share. The shareholders of SIPL will get 1 equity share of Sadbhav Engineering for every 3 equity share of Sadbhav Infrastructure. At present the promoters group holds nearly 46.55 per cent stake in the Sadbhav Engineering and post this transaction the stake will be at 38.74 per cent.
This amalgamation will enable consolidation of the businesses into one combined entity which would lead to simplified corporate structure, productive utilisation of combined resources, economies of scale, reduction in overheads & other expenses, reduced inter-company transactions and reduction in the multiplicity of legal and regulatory compliances.
Further, the company expects with this deal that its net worth will increase allowing it to bid for larger projects. As on June 2019 ended quarter, SEL holds a strong order book of Rs. 10,809.7 crore giving a revenue visibility for next 3 years.
Earlier on 1st July 2019, the company has signed an agreement to sell 9 operational BOT projects (including one held under SEL) to IndInfravit Trust. The company has invested equity of around Rs. 1500 crore for these projects. The company will get a total consideration of Rs. 2550 crore, of which Rs. 1900 crore will be in the form of cash and Rs. 650 crore in the form of 10 per cent units in IndInfravit Trust. With this proceed the company aims to bring down its debt (net debt of Rs. 4060 crore).
SEL is engaged in construction of roads & highways, bridges, mining and irrigation supporting infrastructure while SIPL is engaged in infrastructure.