The Southern Petrochemical Industries Corporation (Spic), one of the oldest business houses from South India, on Wednesday said its debt burden would come down by Rs 1,367 crore if the creditors exercise the settlement scheme proposed by the company.
The company had a liability of around Rs 3,000 crore and it has been servicing this by selling its assets, stakes and through promoter’s infusion.
Addressing the shareholders here, company’s chairman Ashwin C Muthiah said Spic was in resurgence now. The company’s profitability was affected due to huge debt and it also had some efficiency problem at the plant, which is old and a significant investment has been planned to improve the efficiency and with the reduction in liabilities, the company’s profitability would be better.
“I agree we had a lot of problem. I am being open about it. We had a huge liability of around Rs 3,000 crore, 47 lenders and hundreds of unsecured creditors. Today, we have only a handful of creditors and debt is hardly a few hundred crore,” said Muthiah.
According to sources, the burden would come down by Rs 1,367 crore post the settlement with the creditors as well as past repayments to secured lenders/conversion of secured debts into equity.
Muthiah said, the liability could come down to around 10 per cent of the present levels, though this depends on the creditors exercising options under the settlement scheme.
The company has been selling some of its assets and its stakes in a few companies, including Henkel, Manali Petro, Spic SMO and others. Besides, the company’s promoters were infusing money.
The company raised Rs 135 crore last year by divesting its stake in SMO and Manali Petrochemicals and this was utilised to settle the secured lenders.
Even on Wednesday, the company shareholders gave the nod to Spic promoters to subscribe convertible warrants, by infusing around Rs 60-70 crore.
The company proposes to issue convertible warrants to AMI Holdings Pvt Ltd, a company belonging to promoter group and promoted by Ashwin Muthiah, in two tranches. Post the two issues, AMI Holdings in the company will be 18.31 per cent
Overall, post the issue, the shareholding will change. While the main promoter M A Chidambaram Group’s stake will increase to 47.57 per cent from 35.81 per cent, another promoter Tamilnadu Industrial Development Corporation’s stake will fall to 4.34 per cent from 5.32 per cent.
Similarly, public shareholding will drop to 25.95 per cent from 31.77 per cent, The Bank of New York Mellon (custodians for its Global Depository Receipts) will also fall to 8.44 per cent from 10.33 per cent.
A portion of the fund will be utilised to meet obligations for a scheme of compromise and arrangement to settle creditors, said Muthiah.
The company has recorded the highest allowed production of urea of 620,000 tonne in 2011-12. Its revenues were Rs 3,308 crore an increase of around 89 per cent over the previous year.
The company recorded a loss of Rs 6.31 crore as against a profit of Rs 81.98 crore, a year ago. This was attributed to fluctuations in foreign exchange rates, for MAT related to previous years and the payment of finance charges to secured lenders.
