Indian Charge Chrome set to merge with parent as part of CDR package
Aug 02, 2003
The Financial Express

Indian Charge Chrome Ltd (ICCL) is all set to be merged with its parent company Indian Metals & Ferro Alloys (IMFA). The merger is in accordance with the corporate debt restructuring (CDR) package worked out by its lenders.

When contacted, company Joint Managing Director, Subhrakant Panda confirmed the development, adding the operational turnaround of ICCL has already taken place and the merger will further synergise the operations.

The total settlement - valued at over Rs.1,000 crore - will include promoters bringing in Rs 55.60 crore as fresh equity. In addition, term lenders will convert Rs 53.01 crore of the company's longterm debts into equity.

Other conditions include personal guarantee of the promoters accelerating repayment upon receiving funds from the ongoing arbitration with Tata Steel, right of recompense if cash flows are higher than projected, and writing down of ICCL's equity base by almost 40 per cent.

A significant achievement for the company will be the crystallisation of its debts, said Mr Panda. The CDR package envisages payment of principal along with interest at the rate of 10 per cent per annum and the entire foreign exchange fluctuation of Rs 425.46 crore will be repaid over 13 years. The core principal amount that ICCL owes to the banks and FIs is in the order of around Rs 219 crore.

ICCL's largest creditor is IDBI with debt amount, including accumulated interest plus principal totalling to Rs 493.28 crore. IFCI is the second largest lender to ICCL with an outstading amount of Rs 161.50 crore.

ICCL owes Andhra Bank at least Rs 30.27 crore, and over Rs 69 crore to Vijaya Bank. Indian Overseas Bank has an exposure of Rs 16.51 crore, while Punjab National Bank and Union Bank of India have lent Rs 14.93 crore and Rs 7.65 crore, respectively. All these banks had classified their receivables from ICCL as doubtful.

The merger with IMFA is expected to bring in synergies and will enhance ICCL's debt servicing capability. IMFA has already committed 85 per cent of its net cash flows towards repaying ICCL's restructured dues.

IMFA has raised nearly Rs 50 crore on the strength of its balance sheet, which has been passed on to ICCL without any financial and administrative charge, to eneble ICCL to put up an additional boiler at the captive power plant since there was a steam deficiency. ICCL currently uses chrome ore which is supplied by IMFA at cost price. ICCL recently got its mining lease and is yet to resume its mining operations.

For any information relating to IMFA Group or to enquire about a Press Release issued by us please contact:

Mr Kishore Mohan Mohanty