The Telegraph
Since 1st March, 1999
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New formula for HPL debt recast

Calcutta, Oct. 31: The IDBI-led corporate debt restructuring cell has asked the promoters of Haldia Petrochem to invest Rs 1,000 crore. This is the difference between the company’s current debts of Rs 4,300 crore and the Rs 3,300 crore that lenders reckon is a sustainable burden.

Siby Anthony, the cell’s chief general manager, said the first meeting that creditors had with the company led to the conclusion that existing debts should be brought down by Rs 1,000 crore.

Anthony was speaking on the sidelines of a seminar on corporate debt restructuring organised by the Confederation of Indian Industry.

“Generally, we consider debt to be five to six times of earnings before interest, depreciation and tax (EBIDT). In HPL’s case, EBIDT is about Rs 600 crore. So debt comes around to Rs 3,000 – Rs 3,300 crore,” he added.

The CDR cell has also rejected the company’s proposal to bring down the interest rate to 8 per cent and writing-off some of the loans. Anthony said that lenders feel interest should be charged at the prime lending rate of 11.5 per cent. “The lenders are not in favour of writing-off loans,” he added.

HPL, which was referred to the CDR cell recently, has been facing financial crisis since its inception due to a high interest burden which was eating into its profits.

“The CDR cell has found the HPL restructuring process to be extremely complex. Therefore, a committee of major lenders comprising IDBI, ICICI Bank, State Bank of India, IFCI and Allahabad Bank has been formed to look into the debt restructuring,” Anthony said.

J. . Godbole, chairman of the CDR-empowered group, said the debt restructuring process would be complete by December 22.

Antony said the promoters have to bring in fresh equity to make the CDR process operational.

According to chief executive Swapan Bhoumik, the promoters had agreed to invest Rs 468 crore.

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