DCL Polyester has decided to write off its reserves and surplus by reducing the share premium account, state subsidy and debenture redemption reserve account by Rs 31 crore.
The company will also pare the existing equity by 50 per cent, it said in a statement to the Bombay Stock Exchange.
DCL will also issue equity to promoters, while converting a third of the outstanding loan amount of financial institutions (FIs) into equity. This is in line with a financial restructuring approved by the institutions.
Earlier, the FIs had agreed to a three-pronged strategy for restructuring DCL Polyester's debt. DCL outstandings to FIs as on March 31, 2000 stood at Rs 71.73 crore.
Under the scheme proposed by the instiutions, DCL will have to pay one-third of the debt upfront, while another one-third will be converted into equity.
The balance will be restructured to non-interest debt. The board approved the scheme recently.
The restructuring also entails the promoters providing long-term equity-linked finance to enable the company to make the upfront payment.
In May 2000, Reliance acquired the 25 per cent stake held by M B Raju and his associates in DCL Polyester.
The acquisition was made by a Reliance group company Synergy Synthetics. Subsequently, an open offer was made as per the takeover code.
