Sanmar seeks to rejig debt, bankers demand guarantee

CHENNAI: TCI Sanmar Chemicals – part of The Sanmar Group – has approached banks to restructure its Rs 254 crore ($565 million ) loan borrowed to fund an Egyptian acquisition. The talks between the company and bankers have hit a rough patch after the parent company’s refusal to provide a corporate guarantee.
The banks are ready to restructure the loan and the company officials have had two rounds of meetings with the bankers in Mumbai.“We have no other option but to restructure the loan. We are asking them for corporate guarantee which they are not ready to provide,” said a banker.
The Sanmar Group acquired the Egyptian company, Trust Chemicals, in South Port Said in 2007. The Rs 254 crore debt was funded by a consortium of seven banks led by Bank of India. The other bankers include ICICI Bank, Axis Bank, Bank of Baroda , Indian Bank and Indian Overseas Bank.
Sanmar Chemicals is seeking relief in the form of extension of repayment schedule or reduction of rate of interest on the loan. The company, it is learnt, is also looking at fresh disbursements from the banks.
As per the original plan, Sanmar was to ship raw materials from Port Said that would go as inputs for their products at its Cuddalore , Tamil Nadu, plant.
Problems began when the Suez Canal authorities denied the company permission to ship the chemicals through the canal, which was allowed later. The recent political turmoil in Egypt has compounded to their problems , bankers said.
A questionnaire sent to S B Prabhakar Rao, a senior Sanmar official went unanswered.
According to sources, the project is in limbo and the company has not serviced the loan after December. The Rs 254-crore loan was sanctioned at interest rate of 4.10%.
The Sanmar Group is also looking at exiting from Eisenwerk Erla, a foundry in Germany, it bought for 26 million euros, due to the global recession coupled with raising funds to pay for the Egyptian acquisition.