SPIC to divest EPC division to Mirador

Southern Petrochemicals Industries Corporation Ltd (SPIC) is planning to divest its engineering and construction services division to Mirador Commercial Pvt Ltd. The transaction is estimated to involve Rs 50 crore.

The company has sent a note to its shareholders stating that as per the terms of the rework (restricting) package approved by the corporate debt restructuring (CDR) empowered group in February, it is required to meet the repayment obligation by divestment of its non-core business division and assets.

Through its asset sale committee, the company has identified certain assets which have been or are being sold and the sale proceeds would be remitted to the credit of the lenders' account. Accordingly, in consultation with the lenders, the company proposes to divest the SMO division to MCPL.

 

The Tuticorin unit of the company was closed in 2007 after the company faced financial crunch and defaulted in repayment of loans.

SPIC owes 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, the company’s promoters have been infusing money to resume operations.

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

In February 2011, it approved sale of 65.86 million 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 Pvt Ltd.

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

The entire investment (1.4 million equity shares) held by the company in its associate EDAC-Engineering Ltd were sold in October 2010 and the profit from sale was Rs 32.47 crore.