Birla VXL, the Rs 585-crore S K Birla group flagship, has sought restructuring of loans worth Rs 165.6 crore to tide over financial difficulties. As per a proposal tabled with the financial institutions (FIs), the company has sought, among other things, to push back interest payments to a later date and swap foreign debt with rupee loans.
Birla VXL sells textiles under the OCM and Digjam brand names. It also has a chemical division, Saukem, which markets soda ash. Recession in both the chemical and textiles market has hit the company hard and it has formulated a package to help it pull itself out of the rut.
Apart from restructuring of loans, the company also wants to hive off the chemical division into a separate unit. The loans have been given to both the chemical and textiles divisions.
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FI sources said the proposal is being considered in three parts. It consists of conversion of disbursed and undisbursed foreign currency loans into rupee debt, rescheduling of loan repayments to a later date and conversion of rupee term credit into preference shares and non-convertible debentures by the company.
Foreign currency loans worth $23.1 million ($14.3 million for textiles and $8.8 million for chemicals) are proposed to be converted into a rupee loans of Rs 98.32 crore. Birla VXL had been granted fresh foreign debt, which were not disbursed, for part-funding its co-generation power unit at its chemical division in Porbander, Gujarat. It wants the debt to be converted into rupee loans of Rs 24.80 crore.
Of the rupee loans, Birla VXL wants a part of the outstanding loans as on January 1, 1999, of Rs 24.75 crore to be converted into cumulative redeemable preference shares. The shares will carry a coupon of 14.5 per cent and will be redeemed at a premium of five per cent in three annual installments beginning 2005-2006. It has sought the remaining outstanding loans of Rs 17.2 crore to be converted into non-convertible debentures at a coupon of 16.5 per cent per annum. The debentures will be redeemed in four equal annual installments from 2003-2004.
Birla VXL has desired that the repayment schedule of the rupee loans and the converted rupee loans commence from 2003-2004 owing to the delay in the implementation of the power project.
These are proposed to be repaid in 14 quarterly instalments.
The company has also sought the redemption period of the Rs 10 crore preference shares subscribed to by ICICI be deferred. The shares are coming up for redemption in 1999-2000. The company is now planning to redeem them in two annual installments from 2003-2004.
All the FIs and their subsidiaries have already given term loans amounting to Rs 328 crore to Birla VXL. Around Rs 290.45 crore of this has already been disbursed.
The Industrial Finance Corporation of India (IFCI) has already subscribed to Rs 20 crore of debentures. IFCI and ICICI have also stood guarantees for loans amounting to about Rs 84 crore.