Calcutta, Jan. 7: Lenders have agreed to release fresh loans to cash-strapped Haldia Petrochemicals Ltd (HPL) if the existing promoters bring in fresh funds — loan or equity — as a mark of their commitment to the company.
In a meeting held in IDBI Towers in Mumbai today, the bankers told HPL promoters — West Bengal Industrial Development Corporation (WBIDC) and The Chatterjee Group (TCG) — to come up with a concrete cash-infusion proposal within a fortnight.
HPL observers see the development as a softening of stance by the lenders, who were previously unwilling to release funds under any circumstances. Earlier, lenders had insisted on equity contribution from the promoters as it would not have added to HPL’s interest burden.
Fearing that their nearly Rs 3,800-crore exposure to HPL could become bad assets, desperate bankers are now ready to lend if the promoters chip in with some kind of money —loan or equity — to ease the acute liquidity crunch.
The lenders, who are likely to call another meeting soon, have also asked the WBIDC to expeditiously carry out the divestment of its shares and induct a new promoter with deep pockets.
The lenders, led by IDBI Bank, also reiterated their demand to convert part of their Rs 1,800-crore long-term loan to the firm into equity.
IDBI Bank had recently demanded a Rs 500-crore loan to be converted into equity.
Though lenders are willing to bring in Indian Oil Corporation, already a minority shareholder in HPL, as a controlling stakeholder, the matter was not discussed at today’s meeting following opposition from TCG.
The company, which manufactures polymers used in the making of plastic, has been operating at close to half of its installed capacity because of lack of funds.
It has been buying raw material naphtha on a daily basis from the sale proceeds of the previous day to keep the plant running, but at a heavy loss.
Experts had called for shutting down the plant to minimise losses, but the suggestion was turned down by HPL chairman and Bengal industries minister Partha Chatterjee, perhaps fearing a political backlash.
Purnendu Chatterjee, chairman of TCG, said he was ready to bring in money if he was given management control, a demand he has been making for over a decade and for which he has been fighting legal battles in various courts.
In today’s meeting, Purnendu proposed that Haldia Petro should make a rights issue at Rs 10 a share to TCG for bringing in funds.
Lenders, sources said, proposed that TCG should at least provide some unsecured loan for the time being to ease the acute financial crisis at Haldia Petro.
However, Chatterjee, the NRI entrepreneur who helped the Left Front government headed by Jyoti Basu in the mid-nineties to build a petrochemical complex in Bengal along with the Tata group, remained non-committal on this proposal.
Purnendu had opposed the conversion of loan into equity when Partha Chatterjee had converted around Rs 128 crore worth of loan into equity in March last year, fulfilling a 7-year old commitment to the lenders.
The standoff between the WBIDC and TCG over management control is now threatening to engulf Haldia Petro, which reported a loss of nearly Rs 800 crore this year, making it a fit case to be reported to the Board for Industrial and Financial Reconstruction.