Hindusthan National Glass looks at funding options to pare debt

Debt-ridden Hindusthan National Glass & Industries Ltd (HNGIL), the country’s largest container glass-maker, is exploring fund-raising options as it eyes a one-time settlement with banks and other lenders. HNGIL has offered to make a one-time-settlement of ₹1,710 crore to its lenders, of which ₹370 crore has already been paid.

The fund-raising plans come close on the heels of HNGIL failing to rope in private investor Lotus One Investment Pte. The proposal failed to get the requisite clearances, including that of the Competition Commission of India (CCI).

Last March, the State Bank of India, the lead banker, had appropriated ₹290 crore (or 15 per cent of the settlement amount). In September, another ₹60 crore from the cut back balance was repaid to the lenders. HNGIL has adjusted the same amount from the principal obligation of the debt, it said in notes to its profit and loss statement for the period ended December 31, 2019.

The first nine months of FY20 saw HNGIL report a revenue of ₹1,750 crore and a net loss of ₹75 crore. Losses came down on a year-on-year basis.

Enabling provision

According to Taparia Alok, Vice President – Corporate Finance, HNGIL, an enabling provision allows it to explore “various fund-raising options” from potential investors, third-party financiers, its promoters and/or their nominees/affiliates.

The company can explore loans, inter-corporate deposits, non-convertible debentures and equity shares, and has authorised its directors to finalise the investors and negotiate the terms and conditions with them.

“A final decision on how much will be raised and by what means will be taken soon. As of now an enabling provision has been made,” Alok told BusinessLine .

A stock market notification on March 12 said: “The company is in the process of negotiating a one-time settlement with its lenders and the funds proposed to be raised will be used for such settlement, once finalised and for working capital purposes, future capital expenditure and for such other purpose as may be agreed in the definitive documents for such fund raise.”

Previous attempts at paring debt

HNGIL, in its annual report for FY19, had maintained that due to “severe liquidity crunch” it had not been able to meet its debt obligations.

In fact, its auditors’ report for the period ended December 31, 2019, mentions that the company’s net worth has completely eroded and, owing to extended losses, its current liabilities exceed its current assets. HNGIL also has a high debt-equity ratio with its debts standing at ₹245,424 lakh and and equity at ₹9,611 lakh as on that date. The realisable value of assets is lower than the amount payable to secured creditors.

HNGIL therefore sought to rope in an investor. Lotus One, the investor, was incorporated under the laws of Singapore for the purposes of this combination, and did not have any business operations, CCI sources said. In fact, Lotus One’s parent company has indirectly held a stake in Carlsberg India Pvt Ltd, which is primarily engaged in the production and sale of alcoholic beverages.

Incidentally, Axis Bank is planning to sell its exposure of ₹121 crore in the company through a competitive bidding process. This comes after SBI filed an insolvency petition against HNGIL with the NCLT’s Kolkata Bench. SBI has filed a suit against the lenders’ consortium seeking extension of time for repayment of outstanding loans. The matter is pending.

Other lenders include EXIM Bank, HDFC, Standard Chartered Bank, Syndicate Bank, DBS Bank, Rabo Bank, Bank of Baroda, Edelweiss Asset Reconstruction Co, LIC and LT Finance. Among the lenders, HSBC had not agreed to the terms and conditions of a corrective action plan. It has assigned all the rights, title and interest in financial assistance in favour of Edelweiss Asset Reconstruction Co.

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