Financial institutions (FIs) are expected to clear a proposal to partly fund the Rs 990 crore financing gap of Haldia Petrochemicals, by subscribing to the optionally fully convertible debentures (OFCDs) of Rs 400, at the head of institutions meet today.
As per the proposal, the FIs have kept the conversion price and date of the OFCDs open. That apart the clearing of the proposal will mean that the financial institutions will fund both the equity and debt portion of the financing gap.
The FIs have proposed to levy an interest rate of 16 per cent on the OFCD.
Sources point out that conversion price though not fixed has been linked to the price of the initial public offering of Haldia Petrochemical. FI sources point out that conversion price of the OFCD into equity shares will be equal to the price of the public offer.
Financial institutions lead by Industrial Development Bank of India (IDBI) had earlier rejected the proposal of the company to underwrtie its public issue of around Rs 500 crore.
The rejection was on the grounds that the funding will increase the exposure of institutions to the cyclical petrochemical industry. Earlier the institutions had not provided a bridge loan of Rs 500 crore.
