Financial Daily from THE HINDU group of publications
Tuesday, Mar 26, 2002
Corporate - Restructuring
HPL revamp to be delayed; board meeting today
KOLKATA, March 25
THE financial restructuring of Haldia Petrochemicals Ltd (HPL), the three-way joint venture between the Chatterjee group, the Tatas and the West Bengal Government, will not be in place by March 31, 2002 as was hoped earlier.
Although progress has been made in talks with the financial institutions, "a robust agreement on total restructuring will not be possible by March 31'', sources said, adding that what was now being worked upon was an in-principle agreement on the issue which has been pending for nearly two years now.
The HPL board, which meets on Tuesday, was expected to take a view on this matter, according to sources. At a recent meeting with the lenders, the HPL management tried to convince that the company was not keen to become a defaulter, and that it would try its best to meet its obligations to pay around Rs 100 crore by way of interest dues for the fourth quarter of 2001-02.
However, this was linked either to getting the restructure package in place on time or by squeezing operations and payments, they said.
As per the recast proposal which forms the basis of talks, the estimated cost of restructuring has been pegged at around Rs 1,400 crore. Now, a tug-of-war is on between HPL promoters and its lenders on the amount of sacrifice that each is prepared to make.
The company's sponsors are prepared to bring in around Rs 650 crore, but the FIs want this figure to be higher. For funding of interest payable till December 2001 and accrued till March 2002, the package envisages a zero interest term loan.
For the existing loans the period has been split into three categories, from pre-construction to post-construction, for recalculating the interest. The interest of around Rs 360 crore paid between September 2000 and July 2001 is proposed to be converted into loans with a coupon rate of six per cent. Lenders have also been asked for an interest moratorium till March 2003.
The Rs 600-crore worth rupee term debt and debentures are to be converted into preference shares. This will restructure HPL's balance sheet to a debt-equity ratio of 1.64:1. The projected balance sheet for March 31, 2003 as per this recast plan shows an equity of around Rs 2,428 crore which includes Rs 600 crore from lenders.
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