West Coast Paper Mills is close to taking over Rama Newsprint, the country's largest private newsprint maker.

As part of the deal, West Coast will offer to buy out ICICI Bank's 24 per cent stake in the first phase and then will go for a 20 per cent open offer.

The combined effect will transfer management control from the Mumbai-based Ramsinghani family to the city-based Shree Kumar Bangur group. The Ramsinghanis will continue to be shareholders with a 26.75 per cent stake.

The deal, if it goes through, will be the first of its kind in which a financial institution will sell its stake to make room for new management.

An FI source said ICICI Bank and West Coast were in the final phase of negotiating the share price for transfer.

The tenure and rate of interest to be paid to ICICI Bank, post takeover, is also being discussed. It will take another fortnight for the parties to sign on the dotted lines.

A West Coast executive, when contacted, said it was "premature" to talk on the issue.

Rama Newsprint Chairman and Managing Director Vashu J Ramsinghani were not available. His office told Business Standard  that he would call back but he did not.

Rama Newsprint has convened an extraordinary general meeting to seek shareholders' permission for enhancing authorised share capital.

The EGM would also place a resolution pertaining delisting of the company's equity shares from exchanges in Kolkata, Delhi, Chennai, Ahmedabad and Baroda.

Financial institutions, including banks and insurance companies hold 37.12 per cent stake in Rama Newsprint. ICICI Bank enjoys the largest pie-24 per cent- among the institutions.

The acquisition will add 150,000 tonne to the paper making capacity of West Coast. But more importantly, it would give the company a very wide footprint in the paper industry covering many different types of paper.

It would thus emerge as a unique player in the industry.

West Coast was close to raising its capacity to 163,000 tonne.

The S K Bangur flagship manufactured different varieties of cultural paper, MICR cheque paper, coating paper base and duplex boards. It does not produce newsprint.

The Rama takeover would give it entry into a new market. The superior margins in its traditional product lines would also give it greater staying power in the competitive newsprint market.

Rama Newsprint produced quality newsprint used by leading newspapers and publication houses. The company so far invested nearly Rs 250 crore (Rs 2.50 billion) but failed to back it up with profits.

Last year the company incurred a net loss of Rs 39 crore (Rs 390 million) out of a total sale of Rs 187 crore (Rs 1.87 billion).

Sources said West Coast would be require to invest on a pulp division at a cost of nearly Rs 400 crore (Rs 4 billion).

This would modernise the Rama Newsprint plant which at present used recycled paper only as raw material for newsprint making.

Fund flush West Coast has been looking for acquisition for quite some time. Recently, it tried to acquire two small-sized companies but talks failed.