Aug 12: The Chennai-based Uniply Ltd, maker of plywood and plywood-based veneer, on Friday said that it has entered into an agreement to sell its plywood division along with associated working capital to its associate UV Boards Ltd for a total consideration of Rs 300 crore.
As a result of the current transaction, Uniply’s stake in UV Boards will increase to 37.11% and the company will have the right to nominate 4 members to the Board of Directors of UV Boards, it said.
Also, the current management team of Uniply’s plywood business headed by Srinivasan Sethuraman and Ramesh Malpani will be integrated into that of UV Boards and financial results of UV Boards consolidated into that of Uniply on closing of this transaction.
According to the company, UV Boards will fund the acquisition through the issuance of shares worth Rs 111 crore to Uniply and a cash consideration. It will also pay Rs 42 crore for the purchase of Uniply’s Gujarat facility.
The trademarks of Uniply will be licensed to UV Boards for a total fee of Rs 75 crore, to be paid equally over 10 years, in advance at the start of the year, the company said.
“This transaction will result in fully deleveraging the balance sheet of Uniply by repaying all long-term debt outstanding of the company and its subsidiary Vector Projects to the tune of Rs 145 crore,” it added.
Commenting on the development, Keshav Kantamneni, Chairman and Managing Director of Uniply said, “this transaction furthers our stated strategic objective to focus on providing end to end building solutions to our clients whilst building a large and predictable business model for Uniply. We believe the move from an asset heavy to an asset light balance sheet will significantly enhance return on capital going forward, thereby creating value for all stakeholders.”
Meanwhile, the company also announced significant wins in design and build projects to the tune of Rs 1,050 crore. According to the company, the projects are distributed between residential and commercial areas across Maharashtra, Karnataka, Telengana, Tamil Nadu and Delhi.