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Centurion Bank has decided to offer the Sabre Investor Group, Bank Muscat and other principal shareholders its equity shares at a premium of Rs 3.
Existing principal shareholders in the bank such as Asian Development Bank, and Keppel Bank of Singapore which hold around 8 per cent and 17.7 per cent, respectively, in the bank have agreed to jointly contribute at least Rs 25 crore to the bank.
Under the scheme of arrangement, Sabre Capital Worldwide shall contribute Rs 4 crore in cash for recapitalisation of Centurion Bank.
Centurion Bank will, on the other hand, issue and allot to Sabre such number of equity shares of face value Re 1 each at an allotment price of Re 1 each that will equate the contribution made by Sabre after its equity share devaluation, if effected.
Centurion Bank will also allot 13.5 crore warrants which, at the option of Sabre, be convertible into 13.5 crore equity shares of face value Re 1 per share at a premium of Rs 3 per share for a cash consideration.
Sabre will be able to exercise these options after its capital infusion is complete and before five years.
The Sabre Investor Group, which includes other investors such as Citigroup, and Chrysalis Capital including Sabre Capital Worldwide, under the re-capitalisation scheme, will contribute Rs 50 crore by subscribing in cash to the equity shares of Centurion having face value of Rs 1 at a premium of Rs 3.
Bank Muscat will contribute Rs 75 crore as reduced by the amount of consideration in cash to equity shares of Centurion, having a face value of Re 1, at a Rs 3 premium.
Centurion Bank will, however, not get the full amount in cash, which will be adjusted against the net worth of Bank Muscat's Bangalore branch valued at Rs 15 crore.
The new equity shares issued at Re 1 per share to Sabre and 13.5 crore warrants issued under the scheme of arrangement shall be subject to a lock-in period, whereby the shares and the warrants shall not be transferable.
The lock-in will be released at a 40:30:30 ratio at the end of three years, four year and five year. The bank has, however, provided for a provision for changing the lock-in period to suit their interests.
A further infusion of capital will be arranged by Sabre through either a rights or a public issue with "Sabre using its best endeavor to arrange for underwriting the issue so as to infuse Rs 219 crore," according to Centurion Bank officials.