Summary:

DB Corp Ltd, publisher of Dainik Bhaskar, has filed a Draft Red Herring Prospectus (DRHP) for an initial public offering. The DRHP, filed on…

Dainik Bhaskar

DB Corp Ltd, publisher of Dainik Bhaskar, has filed a Draft Red Herring Prospectus (DRHP) for an initial public offering. The DRHP, filed on 14 August with market regulator the Securities and Exchange Board of India, proposes sale of up to 24,781,190 equity shares of face value of Rs10. The issue is for approximately 13.65% of the post-issue capital of the company.

Cliffrose Investments Ltd, a Warburg Pincus affiliate that holds 7.14% stake in the company, is selling and their holding comprises of nearly half of the issue. The other half is the fresh issue of shares by the company, representing a 7.01% stake. Cliffrose, however, has an option of making a pre-IPO placement and necessarily has to sell only shares comprising of 2.99% stake in the company. In that event, the issue will represent only about 10% of the post-issue capital of the company.

The company had earlier filed a draft prospectus in December 2007. On the day (19 December) it was filed, Sensex, the benchmark index of the Bombay Stock Exchange, closed at 19,091.96. In the morning session today, Sensex is at 15,098.90 at the time of writing.

In the prospectus filed in December 2007, the company sought to raise at least Rs660 crore through an issue of 18,800,000 equity shares representing 10.2% of the post-issue capital of the company.

This time however, the company has laid down utilization for only Rs270 crore. Given that this money must come from the issue of 12 million shares by the company, it will have to sell these shares at least at Rs225 per share. The price band and the exact number of shares in the issue will be declared only when the Red Herring Prospectus is filed.

The 2007 prospectus envisaged utilization of Rs460 crore is setting up of new publishing units and expansion and upgradation of existing facilities. Rs85 crore was meant for pre-payment of existing loans. In comparison, the company now sees expenditure of only Rs90 crore from net proceeds in new plants and upgradation, while Rs110 crore will be used for pre-payment of existing loans.

As of 30 June, the company had outstanding secured loans of Rs471.3 crore on a consolidated basis.

For the year ended 31 March, the company posted a consolidated profit after tax of Rs47.7 crore, down from Rs75.8 crore during the previous fiscal.

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