Calcutta, Sept. 28: Haldia Petrochemicals Limited (HPL) is set to get a fresh equity infusion of Rs 500 crore by October 31, almost a month ahead of IDBI’s stipulated date of November 30.
Talking to the reporters here today after the board meeting, HPL chairman Tarun Das said, “According to the debt restructuring package approved by the Industrial Development Bank of India, HPL will have to bring in Rs 500 crore by November 30 and another Rs 200 crore by February 28. We will be able to enter into an agreement with Gail for Rs 500 crore by October.”
Gail will make an upfront payment of Rs 200 crore for acquiring a 10 per cent stake in HPL. For the remaining Rs 300 crore a special purpose vehicle (SPV) will be jointly floated by Gail and The Chatterjee Group where Purnendu Chatterjee will have a majority holding. HPL will issue preferential shares against Rs 300 crore.
“The details of the SPV is being currently worked out. We are also talking to three to four people for another Rs 200 crore which will be brought in before February 28, 2003. There are some Indian companies too,” Das said.
Post restructuring, the equity of the company will go up to Rs 2,253 crore from the present Rs 1,153 crore. The additional Rs 1,100 crore will come in the following manner: Rs 200 crore from Gail, Rs 300 crore through Gail-TCG SPV, Rs 200 crore fresh equity infusion (partner yet unknown) and Rs 400 crore by conversion of loan into equity.
The debt burden of the company will come down from Rs 4,200 crore to Rs 3,100 crore following the restructuring. The debt-equity ratio of HPL will come down to 1.5:1 from 5.2:1. The Rs 500 crore that will come from Gail and Gail-TCG SPV will go in for loan repayment and the Rs 200 crore fresh equity will be used for working capital.
The petrochemical company will be able to earn cash profit from the next financial year.
While explaining the debt restructuring package, Dipankar Chatterjee, West Bengal government’s advisor to HPL said, “Following the restructuring, the stakes of both Purnendu Chatterjee and West Bengal will come down to 34–35 per cent each. None of the promoters will have a single largest shareholding in the company. It will be a board-managed company.”
While IDBI has already approved a moratorium on repayment of long-term loans till April 2005, the financial institution has not yet decided on the exact amount of reduction in interest rate.
“Negotiations are currently on with the banks and financial institutions. We have to negotiate with each bank and FI and the entire exercise will take another two months’ time,” Chatterjee said.
HPL had contracted loans at an interest rate as high as 17 per cent during its financial closure. The company is now asking for a floating rate of interest.
HPL officials feel that the company will be able to save Rs 200 crore through a reduction in interest rate.