The Hindu Business Line : MphasiS may raise $40 m to fund buy-back plan

SOFTWARE services firm MphasiS BFL Ltd may raise up to $40 million either through the issue of debentures or any other instruments to fund its proposed buyback of up to 10 per cent of paid up equity.

Mr Alok Mishra, Chief Financial Officer, said the company expected to buy back up to 10 per cent of the equity after April 10, 2006.

"At present, MphasiS is in the process of merging Kshema Technologies with itself, which is likely to be completed by December-end, during which the company cannot take up buy-back. It was decided that a buy-back would be appropriate after the completion of the current fiscal as it gives us some time to prepare for the process," he said.

The Special Committee of the board of MphasiS set up to examine the buy-back proposal has suggested that the buy-back should be scheduled after the close of fiscal 2005-06 and that the price of buy-back, mode and exact percentage would be decided closer to April 2006. The committee also authorised the management to work towards obtaining a rating for the company to permit flexibility in raising funds to meet the buy-back expenses.

"We may require up to $40 million to meet the buy-back expenses and may raise the same between now and April through the issue of debentures or any other instruments," Mr Mishra said. MphasiS has a market cap of about $400 million and a buy-back of up to 10 per cent would mean an outgo of close to $40 million.

MphasiS decided to go in for a buy-back after Barings India Investment Ltd, the largest shareholder made an unsuccessful attempt to sell its 35.6 per cent stake in the company early this year. Barings, which announced its plans to sell its MphasiS stake in May early this year, called off its decision a couple of months ago over pricing issues.

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