SPIC to sell engineering, construction divisions

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A C Muthiah’s Southern Petrochemicals Industries Corporation Ltd (SPIC) is planning to divest its Engineering / Construction Services Division of the Company to Mirador Commercial Pvt Ltd. The transaction is estimated to be around Rs 50 crore.

The company has sent a note to its shareholders stating that in terms of the rework (restricting) package for the company approved by the Corporate Debt Restructuring (CDR) Empowered Group at is meeting in February, the company is required to meet its repayment obligation by divestment of its non-core business division and assets.

The company, through the assets sale committee constituted to decided on issues relating to sale of assets, has identified certain assets which had been sold and the proceeds being remitted to the credit of the lenders’ account.

Accordingly, in consultation with the lenders, the company proposes to divest the SMO Division to MCPOL. SPIC owes its creditors around Rs 2,845 crore, to a consortium of banks led by Indian Bank.

However, lenders such as IDBI Bank, ICICI and Bank of India have sold their SPIC loans to Arcil.

In recent months, company’s promoters have been infusing money to resume operations.

M A Chidambaram group infused Rs 50 crore, as the first phase infusion, through FICON Holdings Limited (FICON), which increased the promoters stake to 40.22 per cent in February last year.

In February 2011 approved sale of 65,866,053 equity shares held by the company in its associate Manali Petrochemicals Ltd. The company has reported Rs 27.61 crore profit by selling these shares in March 2011. This was transferred to A C Muthiah and SIDD Life Sciences Private Ltd.

The company also entered into share purchase agreement with the joint venture partner Jordan Phosphate Mines Company for sale of entire shareholding (23,163,000 equity shares) in Indo-Jordon Chemicals Co Ltd, and the profit on sale of Rs 78.14 crore is included under exceptional items.

During the year, entire investment (1,427,143 equity shares) held by the company in its associate EDAC-Engineering Ltd were sold in October 2010 and the profit on sale was Rs 32.47 crore.