MUMBAI: Ajay Bijli-promoted multiplex chain operator PVR, which last week announced acquisition of a majority stake in competing multiplex operator Cinemax India, has received approval from its shareholders to borrow up to Rs 10 billion.

The multiplex operator had convened an extra-ordinary general meeting of its shareholders on Thursday to seek approval for the proposed borrowing plan.

PVR did not state the purpose of proposing such a large borrowing plan. At the end of March 2012, it had long and short-term borrowings of about Rs 1.69 billion.

PVR has agreed to buy the entire 69.27 per cent promoter stake in Cinemax India for Rs 3.95 billion, which will make it the biggest multiplex operator in the country.

PVR with the backing of private equity investors will also make an open offer to public shareholders of Cinemax, which would eventually culminate in the delisting of the company?s shares.

As part of the open offer, Cine Hospitality will acquire up to 7.2 million fully paid-up equity shares of face value of Rs 5 each representing 26 per cent of the fully diluted voting equity share capital of Cinemax at a price of Rs 203.65 per share.

PVR had also got the board approval to issue 10.62 million fully paid equity shares on a preferential basis to Ajay Bijli, Sanjeev Kumar, L Capital, Multiples Private Equity Fund I Limited, and Multiples Private Equity Fund at Rs 245 per share to raise Rs 2.6 billion for the acquisition of the Cinemax stake.

Under the preferential issue of equity shares in PVR Limited, Multiples will invest an amount of approximately Rs 1.53 billion, L Capital would invest approximately Rs 823 million and Promoters would invest approximately Rs 250 million into PVR.