JFE to convert JSW FCD into equity at Rs 1500/share

JSW Steel’s deal with Japanese steel giant JFE has gone through a crucial event which will result in gains for the Indian steel producer.

JSW Steel’s stock closed above Rs 1365/share for the last five trading sessions which has triggered conversion of fully convertible debentures (FCD) issued to JFE into equity shares at the rate of Rs 1500/share.

JFE will hold 13.5% stake in JSW Steel for Rs 4800 cr compared to 14.99% stake in the absence of the trigger. However, as part of the agreement, JFE has to hold 14.99% stake in JSW Steel and for that JSW will issue global depository receipt (GDR) worth Rs 600 cr for the remaining 4 million shares. This process may take 90 days to be completed.

JSW Steel had issued debentures to JFE on August 31 at the rate of Rs 1331/share. JSW Steel had signed a technical agreement in November 2009 with JFE and firmed up the partnership by issuing fully convertible debentures to JFE.

JSW Steel management was unavailable for comment on the development.