IDBI okays fund recast package for ICCL
Aug 04, 2003
The Economic Times

The Industrial Development Bank of India has cleared a financial restructuring package for Indian Charge Chrome Ltd. (ICCL) under which it has asked the promoters - the Odisha-based Pandas, to merge the company with its parent Indian Metals & Ferro Alloys (IMFA).

Under the package, the total settlement, including principal and accrued interest has been pegged at over Rs 1,000 crore. After almost three years of negotiations, IDBI, the lead banker, has just released the sanction letters, to which IFCI and ICICI have also concurred.

While IDBI has an exposure of 78% in ICCL, the three lenders have a total exposure of about 88%. The original loan was of about Rs 213 crore, of which ICCL has paid back about Rs.65 crore in the last couple of years.

According to Mr Subhrakant Panda, the Joint Managing Director, ICCL, the restructuring package will come into effect from April 1, 2003. The average interest of about 17% has been brought down to the levels of 10% while the repayment schedule will be over a 13-year-period, Mr Panda added.

The contentious issue of foreign exchange fluctuations since the plant was commissioned in the early 90s was settled with the ICCL promoters agreeing to pay up the entire foreign exchange fluctuation of Rs 425.46 crore demanded by the lenders. The lenders will also be charging a 9% interest on repayment of foreign exchange fluctuations.

IDBI has asked the promoters to bring in about Rs 55.6 crore of fresh equity and take a write-off on the existing equity. ICCL's parent - IMFA will now be converting its Rs 56 crore odd debt exposure in ICCL to bring in the fresh equity.

This includes IMFA's advance of about Rs 49.28 crore about three years back to put up ICCL's new boiler for the captive power plant. The lenders will also convert about Rs 53.01 crore to equity. Besides seeking the promoters' personal guarantee and an annual monitoring schedule, usually associated with recast packages, the lenders also held that the "right of recompense in cash flows are higher than projected by the company".

The lenders have also asked the Pandas to accelerate repayment once it receives funds from its ongoing arbitration with Tata Steel. The arbitrator for ICCL has a claim of about Rs 230 crore from Tata Steel.

The court appointed umpire has recently dismissed Tata Steel arbitrator's counter-claim of Rs 132 crore.

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Mr Kishore Mohan Mohanty
Bhubaneswar
email: kishoremohanty@imfa.in