The Hindu Business Line : KNNL gives more time for completion of debt issue

A debt issue by Karnataka Neeravari Nigam Ltd (KNNL) has set a cat among pigeons in the investment banking community, with some players freely referring to what they claim is the difficulty faced while raising the desired amount. The company, however, has accommodated the arrangers by providing some more time.

KNNL is known to have called for bids in the last week of August for raising Rs 200 crore, which drew the attention of a number of leading investment banking outfits, including players such as AK Capital, Allianz Securities and Centrum Finance.

KNNL, till recently, is known to have collected around Rs 80 crore against the target amount. This, according to investment bankers, may well result in a piquant situation for the arrangers. However, the idea being forwarded on their behalf is that interest rates have risen and the bid condition may be somewhat diluted.

Mr P. N. Sreenivasachary, MD of KNNL, who agreed that the issue is yet to be completed, added that the company is ready to allow the arrangers "a few more days." "Rates have moved up. We also had to pass through a period marked by a few holidays," he told Business Line.

The issue in question (with Rs 100 crore as the target amount) had a tenor of seven years and a coupon of 6.95 per cent per annum; September 22 and November 22 were set as the opening date and the closing date respectively.

KNNL, according to sources aware of the developments, had initially said that the extension of time would not be permitted, while requests by arrangers for revision of the targets would not be entertained after the evaluation of the bids and also subsequent to issue of the mandate.

Mr Sreenivasachary also mentioned that KNNL has had no problems with the Rs 100-crore term loan component, given the positive signals coming from lenders such as Indian Bank. A major issue, in fact, pertains to the immediate deployment of the money that is mobilised. "The funds collected have to be released as and when required, depending on the projects that are being worked out," he stated.