Hindusthan National Glass to raise ₹1,800 crore to pare debt

Abhishek Law Kolkata | Updated on February 24, 2019

Debt-ridden Hindusthan National Glass and Industries (HNG), the country’s largest container glass maker, plans to raise ₹1800 crore through issue of debentures, in its bid to repay banks and other loans.

Around ₹800 crore is to be raised through issue of “unlisted, unsecured, redeemable, non-convertible debentures” to Lotus One Investment Pte of Singapore — a recently roped-in investor — as well as its promoters.

The promoter and promoter group, which include the Somany family and other entities such as Brabourne Commerce Private Ltd, Spotlight Vanijya, and so on, hold 70.73 per cent in the company, as per its September 30 filing.

An extra-ordinary general meeting will be held on March 20 to approve the fund raising plan; bring about other changes with relation to reclassification in authorised share capital; changes in memorandum of association, and others, HNG said in a recent stock exchange filing.

This apart, the company has a provision to raise another ₹1,000 crore from banks or financial institutions or other financiers.

According to a stock exchange filing, this ₹1,000 crore will be raised through issue of 1000-odd debentures, which include “issuance of 400 debentures to be issued in one or more tranches” and another “600 debentures to be issued and allotted in one or more tranches”.

HNG will raise approximately ₹394 crore from Lotus One against issue of compulsorily convertible preference shares. The glass-maker will issue 46,990,840 shares of face value ₹2 each at an issue price of ₹83.77, on a preferential basis.

Previously, it had offloaded its stake in a JV float-glass making company, HNG Float Glass, in order to pare debt.

The company’s annual report for 2017-18 maintains that its total indebtedness at the end of the fiscal stood at ₹2,524 crore (apprx). Its net loss for the first nine months of FY19 stood at ₹123 crore; while turnover stood at ₹1,775 crore.

Operation rejig

HNG is undergoing a restructuring of operations as well, and was expected to pay 85 per cent of its dues to banks within this month. As a one-time settlement, it had on August 27 last year, offered to pay ₹2,006.87 crore by November. The repayment deadline was then extended by another 90 days.

Lenders of HNG include State Bank of India (SBI), HDFC, Syndicate Bank, Rabo Bank, Axis Bank, and Edelweiss Asset Reconstruction Co. Amongst the lenders, HSBC had not agreed to the terms and conditions of a corrective action plan, and later assigned all the rights, title and interest in financial assistance in favour of Edelweiss Asset Reconstruction Co.

Loan default

HNG incidentally has been incurring losses since FY13 that resulted in reduction of its net-worth. Due to depressed market demand and poor financial performance, the lenders restructured the term loans in December 2014.

Stipulations like moratorium in repayment of instalments, infusion of equity by the promoters in various periods and fresh valuation of its assets, did not help much. From November 2017 till December 2018, the company defaulted in repayment of nearly ₹530 crore, that include principal, interest and penal interest and unpaid letter of credit.

Published on February 24, 2019

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