JVSL saves Rs 226cr via debt deal

The Sajjan Jindal-controlled Jindal Vijaynagar Steel (JVSL) has renegotiated Rs 400 crore debt with a foreign lender, which has waived interest and 50 per cent of the principal amount. This has resulted in a savings of Rs 226 crore for JVSL.

JVSL is now in talks with the Unit Trust of India for the settlement of outstanding dues of over Rs 600 crore, bearing an interest of 14 per cent. UTI was out of the corporate debt restructuring committee of financial institutions.

Senior JVSL executives told Business Standard, "We had renegotiated a part of our total foreign debt with a foreign lender and had signed an agreement in October."

As per the revised debt scheme, JVSL will be making 17 monthly payments of Rs 10 crore each to the foreign lender, in lieu of which interest on the Rs 400 crore loan has been waived off along with the waiver of 50 per cent of the principal amount. The loan had an interest rate of 8 per cent.

Also on the cards are similar negotiations with some other overseas lenders. However, the company officials said that it was too premature to comment on the details of the negotiations.

The company has also received a sanction letter from UTI for the settlement of outstanding debt amounting to Rs 603 crore.

Company executives said that the restructuring of the UTI loan is likely to come through within this quarter but decline to comment further.

With this current round of restructuring, the hot rolled coil maker's outstanding debt of Rs 6,000 crore as on March 31, 2003, will stand reduced significantly.

While Rs 800 crore of debt has been converted into equity and preferential shares, the company has been swapping a major portion of its high cost debt with low interest loans.

The company's average cost of borrowing, which was 9 per cent as on March 31, 2003, is set to come down to almost 8 per cent by the end of this financial year.