India Hindalco gets 5 banks for rights offer-sources

By Narayanan Somasundaram

MUMBAI, July 17 (Reuters) - Hindalco Industries (HALC.BO: Quote, Profile, Research), India's top aluminium producer, has signed five banks to manage a rights share offer for up to $1.2 billion, three banking sources with direct knowledge of the matter said on Thursday.

The offering is crucial for Hindalco to replace a $3.03 billion bridge loan it had taken to buy Canada's Novelis in February 2007, and is expected to be launched by October provided the stock market does not drop further, they said.

Merrill Lynch (MER.N: Quote, Profile, Research), Deutsche Bank (DBKGn.DE: Quote, Profile, Research), Citigroup (C.N: Quote, Profile, Research), ABN AMRO and SBI Capital Markets are the advisors to the issue, the sources said.

"We have appointed some bankers, but wouldn't want to name them now," Hindalco's chief financial officer, Sunirmal Talukdar, told Reuters over telephone.

India's BSE share index has fallen more than 36 percent this year, largely due to weak global sentiment toward equities. Nine IPO's have been deferred and several rights issue have extended their closing dates.

Hindalco may split the total offer into a rights issue of equity shares and convertible preference shares, two bankers involved in the deal said.

"The structure is being worked out. A few of us are proposing a combined offer to ensure the deal sails through easily," said one banker, who did not want to be identified as he was not authorised to speak to the media.

Hindalco also plans to raise debt and liquidate a part of its treasury investments in bonds and other instruments to close the bridge loan from ABN AMRO, Bank of America (BAC.N: Quote, Profile, Research) and UBS (UBSN.VX: Quote, Profile, Research), Talukdar said in June while announcing the rights offer.