* Italcementi says eyeing India but no talks under way
* Likely to offer $500 mln for 5-mln tonne plant-sources
* Irish group CRH and India's UltraTech in race-sources
* Jaiprakash to pare $8 billion debt by selling plants
By Sumeet Chatterjee
MUMBAI, Aug 3 Italian cement maker Italcementi
denied it was in talks to buy a cement plant owned by
Jaiprakash Associates as part of plans to expand in
Two sources with direct knowledge of the situation said on
Friday Italcementi was in talks to bid for one of the two cement
plants owned by Jaiprakash in a deal worth about $500 million.
In the first quarter, India accounted for 6 percent of
revenues at debt-laden Italcementi, which is being reorganised
as sales are dragged lower in Europe by the economic downturn.
"Italcementi denies having any talks under way with
Jaiprakash Associates in India, even though we confirm the
interest of the group in evaluating any opportunities for growth
in the country," an Italcementi spokesman told Reuters.
Jaiprakash plans to raise up to $1.6 billion from selling
the two cement plants in western Gujarat and southern Andhra
Pradesh states to pay down part of its $8 billion debt.
According to one of the sources, Italcementi, whose India
unit is one of the top producers in the southern region, is
likely to offer about $100 per tonne for the factory in Andhra
Pradesh, which has the capacity to produce 5 million tonnes of
cement a year.
Jaiprakash - which has interests in cement, construction,
real estate and hospitality - is seeking about $150 million per
tonne for the two plants, the sources said.
The sources declined to be named as they are not authorised
to speak to media. Jaiprakash declined to comment.
Zuari Cement, Italcementi's wholly owned Indian unit,
increased its annual production capacity to about 6 million
tonnes in 2010 from 500,000 tonnes in 1995, according to the
Irish building materials group CRH and UltraTech
, India's No.1 cement maker and part of the diversified
Aditya Birla Group, are also in the race to buy the Jaiprakash
cement plants, a source said last month.
UltraTech, which has an annual capacity of 52 million
tonnes, is interested in buying only the Gujarat plant, while
CRH, which has a 50 percent stake in another cement plant in
Andhra Pradesh, is looking to buy both, the source said.
Jaiprakash's approximately $355 million worth of dollar
bonds are due on Sept. 12, and the company will have to redeem
or restructure them since the price at which the bonds can be
converted into equity is sharply higher than the current value.
Shares in Jaiprakash, whose standalone net profit dropped 24
percent in the June quarter, fell 2.5 percent to 73.10 rupees on
Friday, while the dollar bonds have a conversion price of 165.17
rupees a share.
Analysts said Jaiprakash could use some of the proceeds from
the cement plant sale to redeem the convertible bonds, as the
company's high debt pile had made it tough to raise fresh funds.