ABG Shipyard - Buzzing on stake sale news

ABG Shipyard is buzzing today by showing a gain of almost 8 percent. It opened at 174 to reach highs of 186.90 intraday and is trading up handsomely at Rs.184. The stock is trading up because of the news floating in market circles that the company is close to signing a deal to sell a majority stake in the company to Germany based Privinvest Holding.

ABG shipyard is the largest Private Sector Shipbuilding Yard in India Certified by DNV for ISO 9001 – 2008. ABG Shipyard has received All India Trophy for Highest Exporters, every year continuously from 2003-04 onwards, in Recognition of outstanding Contribution to Engineering Export from Govt. of India - Ministry of Commerce. The company has delivered 149 specialized and sophisticated vessels and has state of the art manufacturing facilities at Dahej and Surat in Gujrat. ABG Shipyard has order in hand over Rs. 16,600 crores.

ABG Shipyard promoters shall offload at least 49% percent stakes thus allowing the investor i.e. Privinvest to be a majority stake holder as per the market buzz. ABG Shipyard promoters are expected to be the minority shareholder post the deal. It is believed that both the companies have entered into an exclusive period for the transaction on May 29.

Privinvest Holdings is a construction and design facilities company with presence in the Mediterranean, the Arabian Gulf, Germany, France and the United Kingdom.  PrivInvest has designed and produced some of the world’s most successful and recognized vessels in the Naval, Commercial Vessels and the Luxury Super Yacht markets.

PrivInvest has 2,500 employees worldwide and has delivered over 1,600 vessels. The company has more than 300 years of accumulated experience.PrivInvest has facilities to build, refit, and repair vessels up to 420 meters LOA.It is believed that PrivInvest has shown interest in taking majority stakes not only to gain presence in India but also to gain from its defense license to build warships. According to reports an open offer may be triggered for the shares of ABG Shipyard.

ABG Shipyard is a debt laden company and requires Rs 1000-1200 crores funds if it has to successfully exit the CDR (Corporate Debt Restructuring).PrivInvest is expected to pay the said amount and ABG Shipyard will be required to get clearance from the Lenders to get the final nod for the deal to be completed.

ABG Shipyard has been struggling on the bourses. For last 1 year the performance has been negative 28 percent. The price to book value is at 2.25 times and the market cap for the stock is 975.66 crores. The stock has shown some buying interest in past 3 to 5 trading sessions.