The financial institutions (FIs) have rejected Purnendu Chatterjee's proposal of converting around Rs 3,500 crore worth of institutional exposure to the Rs 5,170 crore Haldia Petrochemicals Ltd into secured premium notes (SPNs).
The proposal aimed at a financial restructuring of the project which has its debt: equity ratio pegged at 4:1.
"We have informally told Chatterjee that the proposal is not commercially viable. Haldia needs immediate funds infusion. We are closely looking into all options," an institutional source said.
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The Chatterjee Group (TCG) and the West Bengal state government hold 43 per cent each in Haldia Petro's Rs 1010 crore paid up capital with the rest being held by the Tatas.
The project has a debt over of over Rs 4,100 crore, the bulk of which has been pumped in by the financial institutions.
The Chatterjee proposal, submitted to the institutions early this month, envisaged converting Rs 3500 crore worth of institutional exposure to 12-year SPNs.
It envisaged a moratorium on the payment of principal for four years and interest nine years. It also planned to bring down the interest cost substantially by linking it to the bank rate.
From the present level of around 15 per cent, it wanted to bring down the interest to 9 per cent at today's bank rate (bank rate plus 2 per cent).
In effect, the proposal attempts to prolong the maturity profile of the loan, clamp a moratorium on repayment and bring down the cost of the debt.
"The institutions are keen to see the project doing well tiding over the cash crunch. There has to be equity infusion," said sources.
Chatterjee is expected to come out with another proposal soon. Indian Oil Corporation (IOC) seems to be keen on joining hands with the existing promoters of Haldia Petro as a strategic partner.
However, it wants to drastically pare the authorised capital of the company which is not acceptable to the promoters.
There seems to be difference of opinions on the valuation of the company too. The board of the company has recently approved recast of its operations by dividing it into two strategic business units (SBUs) -- naphtha offsite and polymer unit under to CEOs.