GPI Textiles settles FIs' dues

GPI Textiles, part of the Ispat group, has reached an one-time settlement with its creditors "� financial institutions (FIs) "� through a mix of upfront payment and capital restructuring.

As a part of the exercise, the textiles company will clear off its total outstanding to the FIs by paying them around Rs 260 crore in one go. The company owes nearly Rs 500 crore "� a combination of principal and interest "� to institutions such as IDBI, IFCI and ICICI.

While the promoters of the company will chip in Rs 30 crore towards the settlement, US-based fund Avenue Capital will infuse around Rs 150 crore. The lenders will also convert a part of the debts to equity.

Both the foreign fund and the promoters will have 40 per cent stake each, while the lenders will end up with a combined 12 per cent holding. The promoters now hold 51 per cent stake in the company.

While Avenue Capital and the Ispat group will have two representatives each on the GPI board, the group reserves the right of appointing the company's chairman and chief executive officer. At present, Vinod Mittal is the company's chairman and I K Singhal the CEO.

The financial institutes may withdraw their three representatives from the GPI board.

"The strategic induction of Avenue Capital in GPI Textiles is aimed at financial restructuring. It will also help funding the company's expansion in the value-added segment," said an Inpat group source, adding "the promoters are not exiting the company. So, there is no sale".

The Himachal Pradesh-based textiles company has a spinning plant with 90,000 spindles. It incurred a net loss of 57 crore over net sales of Rs 245 crore in the year ended March 2005.

The latest financial numbers of the closely-held company were not available.