The Hindu Business Line : BPL lenders to move Kerala HC to push through recast package

MEMBERS of the corporate debt restructuring (CDR) forum of banks and financial institutions on Tuesday gave final approval to a recast package of Bangalore-based consumer durable maker BPL Ltd and decided to move court to bring around unrelenting lenders.

BPL's lenders, led by ICICI Bank, will move the Kerala High Court (BPL's registered office is in Kerala) under Section 391 of the Companies Act to get the package cleared as some foreign lenders are still objecting to the scheme.

According to a lender source, ABN Amro Bank, which has dues of 5 per cent of the total outstanding Rs 1,400 crore, is yet to agree to the recast that envisages the lenders settling for steep discounts.

Other foreign banks such as Standard Chartered Bank, Citibank and Abu Dhabi Bank, which have exposures to the company, are still non-committal but likely to go along if the High Court asks them to, the source said.

Section 391 of the Companies Act provides for a High Court approval to a scheme of restructuring if three-fourths of lenders agree.

If the required consensus is available, the Court usually approves the scheme after which it becomes binding on all lenders.

The source said about 70 per cent of CDR members have already agreed to the restructuring and the rest are likely to come around soon.

However, the decision is not binding on foreign banks, as they are not part of the CDR mechanism. A total of about 40 banks and financial institutions have lent funds to the company.

According to the package, Japanese gadget maker Sanyo Electric will bring $70 million, which will go to pay off foreign lenders fully and Indian banks partly.

In return, Sanyo will take away BPL's colour television business into an equal share joint venture. Foreign banks may have to take a hit of nearly three-fourths of their outstanding Rs 480 crore as on March 31, 2003, the source said.

While ICICI Bank has the largest exposure to the company at about Rs 600 crore, Canara Bank has about Rs 150 crore and Exim Bank about Rs 40 crore.

Sanyo had refused to pump in money until the restructuring was done.

More Stories on : Courts/Legal Issues | Restructuring | Television Sets | Sick Units

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