The Hindu Business Line : Gayatri Sugars to convert promoters' loans to equity

ADHERING to the stipulation made by Andhra Bank at the time of sanctioning working capital and term loans, Gayatri Sugars Ltd (GSL), the city-based ailing sugar manufacturer currently undergoing restructuring, proposes to convert the unsecured loans brought in by its promoters into equity.

Andhra Bank has asked the company to convert the unsecured loans of promoters of Rs 3.52 crore and the preference share application amount of Rs 4.72 crore brought in by them, totalling Rs 8.24 crore, into equity.

Following this, the GSL board, at its meeting held here recently, has approved a resolution to issue and allot 82,43,500 equity shares of Rs 10 each to the promoters and their associates.

Meanwhile, the Corporate Debt Restructuring Cell at Mumbai has approved a restructuring package to the company. As a part of this, the financial institutions — Industrial Development Bank of India (IDBI) and IFCI — have decided to convert 20 per cent of their term loan and overdue compound interest and liquidated damages into equity.

While IDBI has decided to convert its term loan of Rs 5 crore, IFCI would convert Rs 2.58 crore of loan into equity. The overdue compound interest and liquidated damages of Rs 2.16 crore, comprising of Rs 1.68 crore of IDBI and Rs 48.86 lakh of IFCI, would also be converted into equity.

Accordingly, the GSL board has approved a resolution to allot 97,49,640 equity shares of Rs 10 each to IDBI and IFCI on preferential allotment basis. Of this, IDBI would get 66.8 lakh shares and IFCI would be allotted 30.68 lakh shares.

As a part of the restructuring package approved by the CDR Cell, the institutions have also agreed to convert 13 per cent cumulative redeemable preference shares already held by them together with the accumulated dividend/interest into 6 per cent cumulative redeemable preference shares. Keeping this in view, the GSL board has decided to issue 70.84 lakh preference shares in favour of IDBI and 24.52 lakh preference shares to IFCI.

While seeking the consent of its shareholders for these resolutions by convening an extraordinary general meeting, the GSL board has informed them that the institutions, term lending banks and working capital banks would charge the rate of interest at their respective prime lending rates and prime term lending rates from April 1, 2003 in terms of the restructuring scheme cleared by the CDR Cell.

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