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Spic Petro revival plan: Lenders to meet on Oct 11

M. Ramesh

Chennai , Sept. 24

BANKS and financial institutions that have lent to SPIC Petrochemicals Ltd will meet on October 11, to discuss a revival plan for the company.

A highly placed source in SPIC said that the lenders were "positive" about SPIC Petro's PTA/PFY project and could design a revival package in such a way that the project could be restarted in a phased manner.

SPIC Petro is a subsidiary of Southern Petrochemical Industries Corporation Ltd. The company was set up to put up a PTA/PFY project, but got caught in a legal wrangle with Chennai Petroleum Corporation Ltd, with which SPIC had a joint venture for putting up a similar project.

When an injunction was passed on the project by the Madras High Court in October 1997, an amount of Rs 946 crore stood locked in the project. Of this, SPIC's contribution was Rs 252 crore (against a commitment to the project of Rs 210 crore, the company points out), and the lenders had brought in Rs 694 crore (principal), against their commitment of Rs 1,347 crore.

At that stage, the PFY plant was more than 75 per cent complete, or about 12 months away from commencement of production. The PTA plant had progressed about 11 per cent, or about two years from completion.

Sources in SPIC say that the project is still viable. The total cost of the project has gone up, from Rs 2,125 crore to Rs 2,900 crore, but with certain key modifications. First, the capacities have been increased (from 2,50,000 tonnes to 3,15,000 tonnes for PTA and 65,000 tonnes to 80,000 tonnes of PFY). Second, a `texturising plant,' which might cost about Rs 200 crore, has been included in the project.

SPIC to save Rs 215 cr in FRN recast

SPIC has said that it has concluded a restructuring of the floating rate notes issued by it in 1996, of $120 million.

The company's press release says that a noteholders' meeting was held recently in London. The restructure includes "a substantial reduction in the face value of the notes and an approval to convert over 50 per cent of the US dollar-denominated notes into Indian rupee denominated notes."

The company has quantified the reduction in debt as Rs 215 crore.

This is the second time that the FRN are being restructured. In January 2001, the company (after defaulting on interest payments the earlier year) got the noteholders' approval for a restructure plan, which included payment of $92.25 per note, a lowering of interest payable and a five-year rollover of the notes.

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