Haldia lenders to pin equity conversion rider to recast plan

The lenders to Haldia Petrochemicals have decided to insert a conversion clause in the Rs 2,476 crore loan recast cleared by the corporate debt restructuring (CDR) cell last month.

The lenders have decided to insert a clause in the loan agreements, which give them the right to convert 20% of the outstandings into equity at par in the event of a default by Haldia.

The lenders have also made it clear that the Chatterjee Group (TCG) will have to pledge shares (of listed as well as unlisted companies) worth at least Rs 25 crore in lieu of promoters' guarantee.

"We are insisting on a conversion clause in this case owing to the huge size of the debt recast. The pledge of shares is being demanded as TCG group have said that they do not give personal guarantees of promoters as a matter of policy," sources in the lenders consortium that cleared the debt recast said.

Under the package cleared by the CDR cell last month, GAIL India will infuse Rs 332 crore as equity. The first tranche of Rs 200 crore will be brought in within 30 days of the sanction with the balance being infused within 90 days of the sanction.

The company will also have to raise around Rs 268 crore through an initial public offer, which will be fully underwritten by TCG. Also, the unsecured loan of Rs 272 crore extended by the West Bengal government agencies will have to be converted into redeemable preference shares carrying a coupon rate of 1 per cent. Also, the company will arrange for unsecured naphtha credit facility equivalent to the outstanding naphtha credit of Rs 285 crore.

As part of the restructuring, TCG will have to pledge at least 60 per cent of its existing equity of Rs 433 crore. This is a part of the attempt to see to it that post equity infusion at least 51 per cent of the company's stake is pledged with the lenders.

Meanwhile, a monitoring committee, comprising representatives of IDBI, ICICI Bank, IFCI, SBI, Allahabad bank CDR cell, has been constituted to monitor the implementation of the restructuring package. IDBI has been appointed as the monitoring agency which will forward report on the progress and implementation of the package to CDR cell.

The committee will monitor the compliance of reliefs and conditions of package both by the lenders as well as the borrower. It will also look into the performance of the company vis-a vis projections, violation of conditions/covenants of the restructuring package by HPL.