It has advised the banks and financial institutions to refer the dispute to the corporate debt restructuring forum constituted by the Reserve Bank of India.
Government officials told Business Standard that the promoters had agreed to infuse about Rs 300 crore additional equity in the project. The decision to refer the project to the corporate debt restructuring forum was taken at a meeting convened by Finance Secretary D C Gupta on Friday.
The officials said Indian Oil Corporation (IOC) was no longer interested in investing in the project, leaving Gail India as the sole player in the running.
The restructuring would be undertaken if three-fourth of the lenders agreed to the proposal put forward by the management. The remaining 25 per cent lenders would fall in line, they added.
Financial institutions had been insisting on a fund infusion and a strategic partner as conditions for restructuring the debt. Gail and IOC were the two contenders, with the former favoured due to its interest in infusing more funds. Institutional sources said IOC had lost interest in the project because of the delay in finalising details.
The promoters had been asked to infuse about Rs 700 crore in the company. Gail had proposed an equity infusion of Rs 200 crore, and had put in a number of conditions for bringing in the funds. However, the terms were not agreeable to the lenders, institutional sources pointed out.
The lenders were of the opinion that the promoters were not sticking to their side of the promise of inducting a strategic partner and an equity infusion by The Chatterjee Group (TCG). TCG had also proposed to bring for Rs 270 crore into the project, the sources added.
They said the lenders were going to insist on an immediate infusion of Rs 200 crore into the company and set a deadline for bringing in the remaining amount before the interest rate was reset.
Haldia Petrochemicals Chairman Tarun Das had written to the government presenting the promoters' proposal. The lenders on their part told the finance ministry that the promoters had repeatedly gone back on their promise of fund infusion.
The lenders were of the opinion that a fund infusion by the promoters was essential because the debt-equity ratio was close to 4:1, instead of the original 1.5:1.
The project has suffered a cost over-run of around Rs 700 crore. The original plan to come out with an initial public offering has also not been fulfilled.
