Banks clear sale of BPL CTV unit pie to Sanyo

The corporate debt restructuring (CDR) cell of banks and financial institutions has approved BPL Ltd's proposed sale of stake in the colour television division to Sanyo Electric Company of Japan.

The proceeds of the sale, roughly Rs 400 crore, will be used to settle the dues of BPL's lenders.

At a meeting of lenders at the headquarters of the Industrial Development Bank of India (IDBI), the sale of the colour TV business was approved. "While some of the lenders will exit on receiving cash, the others will recast the remaining debt. The amount to be recast will vary, depending on the number of lenders who decide to exit," said an institutional source who attended the meeting. Company executives were not available for comment.

The Bangalore-based, consumer durables company has total dues of Rs 1,400 crore. ICICI Bank with an exposure of Rs 600 crore is the lead bank of the consortium of lenders which includes Canara Bank "" with an exposure of Rs 150 crore "" and Exim Bank (Rs 40 crore).

The company's debt recast proposal for the remaining dues will be taken up at future meetings of the CDR. The details of the package may be reworked by the lenders, said sources. At the moment, the CDR has suggested a 10-year repayment period with a reduced interest rate of about 12.5 per cent.

The company has worked out three options for its lenders as per the restructuring package. The three options are: exit the account altogether with a 72 per cent "haircut" on the principal amount; take a 50 per cent "haircut," receive 25 per cent of the principal as cash upfront and restructure the remaining amount through the CDR; take no "haircut," receive 2 per cent of the principal as cash and restructure the remaining amount.

The lenders have approved the options and each will choose one for itself, possibly in the upcoming CDR meeting.

The company worked out these options based on the available cash and the prospects of the 'residual BPL' "" BPL without the colour television division.