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International Paper Further Dilutes 17.2 Percent Share in IP APPM

International Paper Co., which earlier has sold off its controlling interest in India based writing and printing paper business International Paper APPM Limited (IP APPM) to West Coast Paper Mills Limited (WCPL) last year, has become a minority shareholder of IP APPM.

June 26, 2020

International Paper
The US-based major diluted 17.2 % of its stake in IP APPM (now renamed, Andhra Paper Limited) .

As reported in a leading daily, International Paper has diluted 17.2 % of its stake in IP APPM (now renamed, Andhra Paper Limited) through an offer-for-sale (OFS) to institutional, high net worth individuals and retail investors over the last two days.

Pre-OFS, International Paper held 20 % stake in the company. Post OFS, they are left with a residual stake of 2.8% only. As per SEBI guidelines, IP will have to wait for 12 weeks before selling of their remaining stake.

As per the share purchase agreement with WCPL in May 2019, IP had agreed to explore various alternatives to divest its remaining 20 % ownership interest (or 7,954,008 shares) in IP APPM. It decided to use the OFS window to sell off 39.77 lakh equity shares, representing 10% of the total paid up share capital of IP APPM to non-retail and retail investors. The OFS also had a greenshoe option to additionally sell up to 28.64 lakh shares, representing 7.2 % stake.

The floor price for the sale was fixed at Rs 186 a piece, the company said in a disclosure to the stock exchanges. The shares got sold off for Rs 193 a piece to non-retail investors which got oversubscribed by two-times. Shares sold to retail investors today, Friday, was oversubscribed by five-times, according to the BSE website.

The Memphis-based global producer of renewable fibre-based packaging, pulp and paper products, IP had acquired Andhra Pradesh Paper Mills from the LN Bangur family in October 2011. After managing it for about eight years, it entered into a share purchase agreement with Kolkata based S K Bangur controlled West Coast Paper Mills in May 2019 to divest a controlling stake of 55 % out of 75 % held by them.

Following an open offer in line with SEBI guidelines, West Coast Paper Mills acquired 17.2 % stake of IP APPM from the public shareholders last year at Rs 450.63 a share and another 55% stake from IP at Rs 275 per share. Post offer and acquisition, WCPM stake in IP APPM stood at 72.2 %.

As per the agreement between IP and WCPL, the IP move to divest its holding of 20 % was necessary to comply with minimum public shareholding guidelines of SEBI.