HNG ropes in new investor to pare debt

Debt-ridden Hindusthan National Glass & Industries (HNG), the country’s largest container glass maker, has roped in a new investor, Lotus One Investment Pte of Singapore.

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

According to Mukul Somany, Vice-Chairman & Managing Director, HNG, the CCPS subscription agreement was entered into on January 13. “The fund-raising process by bringing in a new investor is on, and a subscription agreement has been worked out,” he told BusinessLine.

However, a subsequent plan to raise funds through issue of debentures has been deferred, as per a latest notification to the bourses. “The board has decided to defer the decision with respect to the proposed fund-raising through private placement of debentures,” it said.

According to Somany, the board meet to finalise fund-raising (via issue of debentures) is expected “soon”.

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.

Funds, sources say, will go towards reduction of debt.

HNG’s net loss for the first six months of FY19 stood at ₹44 crore; while turnover stood at ₹1,148 crore.

Operation rejig

HNG incidentally is undergoing a restructuring of operations. The company is expected to pay 85 per cent of its dues to banks by February 22 this year.

As a one-time settlement, HNG had on August 27 last year, offered to pay ₹2,006.87 crore as settlement by November. The repayment deadline has been extended by another 90 days (to February).

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).

The company had, in 2018, offloaded its stake in a JV float-glass making company, HNG Float Glass, with a view to pare debt.

Lenders of HNG include State Bank of India (SBI), EXIM Bank, HDFC, Standard Chartered Bank, Syndicate Bank, DBS Bank, Rabo Bank, Bank of Baroda, Axis Bank, Edelweiss Asset Reconstruction Co, LIC and LT Finance.

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, were also laid. However, this wasn’t of much help either.

From November 2017 till September 2018, the company defaulted in repayment of nearly ₹420 crore that include principal, interest and penal interest and unpaid letter of credit. The auditors, in their report on November 14, also pointed out that the realisable value of assets is lower than the amount payable to secured creditors.