Foreign banks likely to sell Dabhol debt at 30% less

Likely to settle for 70 cents per dollar of debt.

Foreign lenders to the beleaguered Dabhol Power Company may bite the bullet. According to sources close to the lending community, the foreign lenders have finally started seeing the logic in the local lenders' offer to buy their $650 million in debt and guarantees at a discount.

"They (the foreign lenders) may settle for 70 cents per dollar of debt," said a source. This essentially means selling their debt at a 30 per cent discount.

"If they want to get their money right now and not wait for years, this is a good deal," said a source among the lenders.

The nitty-gritty of the deal has been discussed at the two-day Singapore meeting of lenders. "It will take time (to strike the deal). We have not reached the last stage but both sides are trying hard to find a settlement," said another source.

The foreign lenders' exposure in Dabhol Power Company is about $90 million in the first phase and $270 million in the second phase.