BPL in quagmire over debt restructuring

BPL Limited, which has been making considerable efforts to revive its consumer electronics business after running up a debt of Rs 1,400 crore, seems to have run into opposition from a host of its lenders.

Several financial institutions are learnt to have opposed the debt restructuring programme which the company is trying to see through.

The corporate debt restructuring (CDR) cell of banks and financial institutions recently approved BPL Ltd's proposed sale of its colour television division to Sanyo.

However, according to sources in the BPL Group, a few financial institutions are not entirely satisfied with the CDR and might even mull moving towards closure of BPL Ltd.

BPL under CDR has offered three options under which one of the options for banks and financial institutions is that they agree for a waiver of 72 per cent of dues and take steps for withdrawing legal suits filed against BPL.

Another option for lenders is an upfront cash payment aggregating to 25 per cent of loans and waiver of 50 per cent loans with the remaining quantum being restructured over an extended period.

The third option is one under which 75 per cent of the outstanding will be converted into loans carrying zero per cent interest repayable in 10 years while the remaining part will be spread over an extended period.

According to sources, some of the banks are not entirely happy with this kind of mechanism and are expected to offer stiff opposition in the forthcoming CDR meetings. 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 with Rs 40 crore.

As part of this exercise, the company in due course hopes to raise a total of Rs 774.13 crore. In addition to the Rs 322 crore it will get from the sale of its colour TV business to a 50:50 joint venture with Sanyo it plans to get Rs 30 crore from the sale of its alkaline business.

Sale of investments under promoters' contribution is expected to fetch Rs 100 crore and an additional of Rs 221.3 crore is hoped from internal accruals.

On top of this it intends to raise Rs 92 crore from fresh term loans. The company already has a total outstanding of Rs 615.6 crore under term loans from 12 banks and financial institutions. It is not yet clear how the company will raise a further term loan of close to Rs 100 crore.

BPL is also in the process of raising Rs 92 crore from a foreign investor which will be used to meet the statutory liabilities of Rs 51 crore and unsecured creditor payments of Rs 15 crore. The company has stated that the cost of restructuring will be Rs 746.2 crore.