The Hindu Business Line : SPIC lenders meet inconclusive

Chennai, Aug. 23 Lenders of Southern Petrochemical Industries Corporation (SPIC), who met today, discussed five options of getting their moneys back — one-time settlement, bringing in a strategic investor, deep restructuring of debt, liquidation and transfer of the loans to Asset Reconstruction Company of India (ARCIL).

The meeting did not end in any resolution, the issue being so complex, but it threw up enough indications to suggest that the bankers may have little choice but to sell their loans to ARCIL. SPIC owes its lenders Rs 2,845 crore and ARCIL has already bought a fifth of the loan stock from ICICI Bank, IDBI Bank and Bank of India.

As regards one-time settlement, Mr Ashwin Muthiah, Vice-Chairman, SPIC, told the meeting that the company was willing to revive its earlier offer of settling 52 per cent of the loans, provided all the lenders unanimously accepted the proposal. (SPIC had earlier given a proposal with three options of loan restructure, after entering into back-to-back arrangements with three other lenders/investors — Deutsche Bank, AMD Capital and WL Ross.)

Mr Muthiah told Business Line that if the lenders accepted the ‘52 per cent’ proposal, SPIC could go back to the financiers and revive its agreement with them. A banker today termed the possibility of all the lenders agr eeing to the proposal as “remote”.

Although ‘long-term restructuring of debt’ and liquidation of the company were discussed, some bankers who participated in the meeting said that these were not favoured.

Bringing in a strategic partner would also be difficult at the moment because the investor would also want steep cuts in the debt.

That leaves only the option of banks selling their SPIC loans to ARCIL. If ARCIL succeeds in securing most of the SPIC-debt, it would be in a better position to deal with a prospective investor. “ARCIL could indeed swap part of its debt into equity to sweeten such a deal,” another banker said. ARCIL is advised on this issue by YES Bank.