Haldia Petro is 'vulnerable'

KOLKATA: Haldia Petrochemicals (HPL) would remain “vulnerable� even after the financial restructuring. The lenders to the HPL project were of the view that the “finance cost even after the proposed restructuring would be 10.8% of the turnover (about Rs 3,000 crore) and 13% of the cost of production�.
This, the lenders felt, would make the project “vulnerable� despite restructuring, “particularly when the repayment schedule schedule has been stretched over 17 years� involving two-three business cycles which would also incorporate the ensuing WTO regime.
The documents in possession of TNN reveals that though the lenders were in favour of converting loans of about Rs 300-400 crore to equity, however, the promoters were unwilling to accept it.
The corporate debt restructuring (CDR) package finalised so far envisaged that fresh capital infusion of Rs 600 crore of which Rs 332 crore would be injected by Gail in two tranches and the balance Rs 268 crore would be raised through public issue with 100% underwriting arrangement by the Chatterjee Group through Chatterjee Petrochem (Mauritius).
Gail would give Rs 200 crore within a month of the CDR sanction (the date on which the letter of approval would be issued) and the remaining portion of Rs 132 crore would be come after three months. The package also envisaged conversion of rupee term loan (including bonds, DCPS, OCD) of Rs 140 crore, funding of interest for six quarters from July 1, 2002 to December 31, 2003, reduction in interest on rupee loans to 10.5% among others.
The documents show that the Chatterjee group chairman, Purnendu Chatterjee, has ruled out the “scope of bringing in any additional fund� to the project. He told the lenders that his group had “not received any returns so far and no return was envisaged in near future�. Chatterjee had also pointed out that West Bengal government too had invested in the project without getting any returns. The state government would make more sacrifices by converting unsecured loan to a preference equity having one per cent interest.
According to Chatterjee, the proposed share capital of Rs 2,000 crore would be “already high providing hardly any earning per share (EPS), making investment from investors, both existing and proposed, an unattractive proposition�.