Fairfax India lines up US$300-million deal with PVC manufacturer Sanmar Chemicals
New Delhi: Fairfax India Holdings Corporation plans to invest $300 million in Chennai-based Sanmar Chemicals Group through a combination of equity and fixed income securities. It will acquire a 30% equity ownership in Sanmar.
Fairfax said the investment would be made through its wholly-owned subsidiaries. The company expects to generate a fixed return on its investment.
It will infuse an initial tranche of $250 million upon closing the transaction. The second tranche of $50 million will be funded within 90 days thereafter by Fairfax Financial Holdings or another investor.
The first tranche is expected to be completed in the second quarter of 2016 subject to meeting certain conditions such as establishing a term loan facility for $280 million between TCI Sanmar Chemicals Egypt, the Egyptian subsidiary of Sanmar, and its lenders.
Sanmar is one of the largest suspension polyvinyl chloride (PVC) manufacturers in India with an installed capacity of 300,000 tonnes a year, apart from being the largest specialty PVC company in India. Sanmar is in the process of expanding its PVC capacity in Egypt from 200,000 tonnes a year to 400,000 tonnes per annum.
Once the expansion is completed, Sanmar will have a total PVC capacity of 700,000 tonnes per annum, making it one of the largest PVC companies in the world.
Sanmar also manufactures caustic soda, chloromethanes, refrigerant gases, industrial salt and speciality chemical intermediates.
Prem Watsa, chairman of Fairfax India, said in a press release: “We look forward to our partnership with this distinguished south India group which, in addition to its technical and business expertise, is well known for its integrity and corporate social responsibility.”
Welcoming this investment, Sanmar Chemicals Group Chairman N Sankar said, “Sanmar will benefit by having a financially strong shareholder with a global footprint. We look forward to the expansion of our capacities in Egypt and India creating value for all stakeholders.”
Fairfax to invest USD 300 mn in Sanmar Chemicals