TCG lines up Rs 200 cr fresh equity for HPL

The Chatterjee Group (TCG) has arranged for Rs 200 crore fresh equity for Haldia Petrochemical Ltd (HPL), marking the beginning of long awaited debt restructuring process.

Sources said TCG, one of the principal promoters of the Rs 6,000 crore company, has roped in about five to six investors to put in the money in the company.

In the first phase, Rs 143 crore is being pumped in, while the rest Rs 57 crore would be brought in within a month, taking HPL's equity base to Rs 1,460 crore.

The development gains in significance as it would significantly minimise the requirement of making an initial public affair (IPO).

The company had considered the idea to make an offer, underwritten by TCG, to raise the Rs 268 crore it promised to bring under corporate debt restructuring (CDR) package.

Lenders of the CDR cell had asked for fresh capital infusion of Rs 600 crore and another Rs 140 crore conversion of debt into equity. The extended equity would be in the range of Rs 2,000 crore.

The gas-to-petrochemical major GAIL India Ltd had agreed to bring in Rs 332 crore in lieu of 16 per cent stake in HPL.

Even though, TCG had initially given time till July-August to do the IPO, lenders turned the heat on the company after GAIL failed to bring in its part within stipulated time owing to procedural delay. Lenders asked TCG to arrange Rs 200 crore to initialise the CDR process.

The government of West Bengal, a promoter in HPL, expressed satisfaction that the CDR process would start soon. "It was important to get the benefit of CDR," sources in government said.

Apart from the private equity, another Rs 140 crore is being in brought in as conversion from debt into equity. This will reduce the piled up debt burden of the company. With this, number of financial institutions and banks would pick up stake in the company.

HPL has a debt of Rs 4,500 crore with an average coupon rate of 14.5 per cent. Post CDR, lenders agreed to bring down the average to around 10.5 per cent.

HPL had an accumulated loss of Rs 1,057 crore at the close March 2003.

It recorded a staggering 45 per cent jump in sales for the year ending March 2004. It's sales touched Rs 4,300 crore. The company is hopeful to post a small profit after tax of Rs 50-60 crore, if CDR package become effective.