Polestar advises on INR 300 Cr Mezzanine Finance
Polestar acted as an Exclusive and Sole Advisor to an Indian Conglomerate (“Group”) to raise Mezzanine Finance from a large domestic AIF (“Investor”) against their listed cable company (“Company”).
- Situation - The Company needed equity infusion but the Group didn't want its stake to be diluted.
- We assisted the Group raise mezzanine financing at one of their holding companies by pledging shares of the listed Company. The Group utilised the borrowing proceed to fund preferential allotment by the Company thereby increasing its stake.
- The cost of financing was brought down by having a fixed coupon, redemption premium and upside payoff linked to the operating performance (EBIDTA) of the Company instead of the listed share price as the same could perform independent of the operating performance.
- By linking the upside to the operating performance, we helped the Investor mitigate the upside payoff risk as stock had limited float and market price many a times could perform independent of operating performance.
- Upside was payable only if the operating performance of the Company improved resulting in win-win situation for both Group and the Investor.