Aluminium giant may not take StanChart loan

After nearly three months of deliberation, Nalco may call off its plan to raise debt of €70 million from Standard Chartered Bank, BL Bagra, director (finance), Nalco, said.

The aluminium major has been planning to raise the funds to meet its ongoing capital expenses but the company does not agree to some "unwarranted" conditions put out by the UK-based bank.

"They have asked us to reimburse the fees they paid to the legal advisor and the valuer who assessed Nalco's assets. This was not part of the original agreement and we are not ready to pay the money," Bagra said.

 

"The subprime debt crisis has led to higher interest rates and the economic situation has also led to a lower rating for India. I suppose these reasons may have forced them (Standard Chartered) to rethink the deal."

Bagra said the company will not have a problem in meeting its current capital expenses. "We have enough resources. We are on the verge of completing our order placement." StanChart had agreed to disburse the loan at a spread of 72 basis points over euro Libor, at 4.08 per cent, Bagra said.

He said at this rate, the company could have gained about Rs 10-11.5 crore annually in the form of arbitrage - the company could have paid the difference in interest rates that it earned from its deposits in the domestic market.