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M. Ramesh

Chennai , Aug. 21

Deutsche Bank, ADM Capital and the US-based WL Ross, private equity investor, have offered to bring funds into Southern Petrochemical Industries Corporation (SPIC). These offers figure under different scenarios of restructuring SPIC's debt.

The multi-scenario restructure proposal has been submitted by the company to the consortium of bankers, which is currently examining it.

Options

SPIC has a total debt of about Rs 2,850 crore on its books. SPIC's proposal speaks of three separate options. The heart of the proposal is ring-fencing of the fertilisers business into a company that may be called SPIC Fertilisers Ltd and the funders getting stakes in it at a later date.

Under the first option, SPIC would transfer Rs 848 crore of debt to SPIC Fertilisers. The lenders would be given shares in this company for a price of Rs 156, for a value of Rs 759 crore. They would also be given shares at a price of Rs 30 in SPIC Petrochemicals Ltd for Rs 371 crore.

Divesting stake

SPIC would divest its stake in Tamilnadu Petroproducts, Manali Petrochemicals and the pharma business and raise Rs 201 crore and pay the lenders. The lenders would write off loans worth Rs 666 crore.

The second option seeks to "induct new investor and effectuate one-time-settlement of all current lenders." Under this, Deutsche Bank would bring in $250 million (Rs 1,100 crore) against the security of current and future assets of the fertilisers business and pledge of SPIC's 52 per cent stake in Indo Jordan Chemicals. The lenders would write off loans of Rs 1,004 crore. Sources said that at a later date, Deutsche Bank would convert a part of the debt into equity.

The third option is to "induct new investor and effectuate one-time-settlement of part lenders and restructure of the remaining." This option envisages two scenarios, the first involving ADM Capital and the second, WL Ross. The two have offered to bring in $115 million (Rs 475 crore) and $350 million (Rs 1,540 crore) respectively.

"Promoters have agreed to sacrifice equity in order to build a viable solution indicating their commitment to turnaround the business," SPIC's proposal says.

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More Stories on : Fertilisers | Restructuring

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