ICCL's Rs 1000 crore recast cleared
Aug 02, 2003
Business Standard

The long-awaited restructuring plan of Indian Charge Chrome Ltd (ICCL) has been cleared by the financial institutions led by the Industrial Development Bank of India.

The value of the settlement is estimated at Rs 1,000 crore. ICCL was in the docks owing more than Rs 900 crore to banks and financial institutions towards loan principal and interest. The burden had dragged down the financial performance of the company significantly.

As per the restructuring plan, ICCL is now allowed to repay the principal along with interest at the rate of 10 per cent and the entire foreign exchange fluctuation component amounting to Rs 425.46 crore over 13 years.

Subhrakant Panda, Joint Managing Director of the company, said, though payment of foreign exchange fluctuation component was a contentious issue, the company has agreed to pay the amount following prolonged negotiations.

The total amount to be repaid by ICCL is estimated at Rs 925.70 crore. The company has already repaid about Rs 67 crore to the lenders since January 2000. The write-off as a result of restructuring is mostly notional and not in any real terms.

The company had taken a loan of only Rs 213 crore in 1985, 90 per cent of which was in foreign exchange. Due to the devaluation of rupee in the 1990s, the debt burden had galloped rapidly.

Among other things, the restructuring plan proposes conversion of Rs 53.01 crore of the loan amount into equity by the term lenders. The conditions for effecting the restructuring proposal include personal guarantee of promoters on repayment, merger of ICCL with parent company Indian Metals and Ferro Alloys (IMFA) to draw upon synergies, accelerating repayment upon receiving funds from the ongoing arbitration with Tata Iron & Steel, right of recompense if cash flow are higher than projected, writing down ICCL's existing equity base and converting Rs 55.60 out of IMFA's advance to ICCL into fresh equity. IMFA had provided an interest free advance of Rs 56.60 crore as on March 31, 2003.

This apart, subsidy from IMFA on account of chrome ore supplied at cost to ICCL amounts to Rs 19.41 crore. IMFA has also committed 85 per cent of its net cash flow towards repaying ICCL's restructured dues. Meanwhile, about 88 per cent of the lenders by value have agreed to the restructuring proposal.

Of this, IDBI had the largest exposure to ICCL amounting to 78 per cent of the debt while other two institutions such as ICICI Bank and IFCI together had an exposure of 10 per cent.

Commenting on the approval of the restructuring plan, ICCL Joint MD, Panda said, "there had been turn around in the company's operational performance following allotment of captive mines in late 1999".

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