Fis Except Idbi Agree To Bail Out Essar Frn

Financial institutions, barring Industrial Development Bank of India (IDBI), have agreed to refinance Essar Steel's floating rate notes (FRN) to the tune of $104 million. The heads of institutions meeting held on January 20, 2000, had approved the refinancing proposal and asked Essar to bring in the remaining $8 million of the total redemption of $112 million.

The institutions, including Industrial Finance Corporation of India (IFCI), ICICI, Life Insurance Corporation of India (LIC) and Unit Trust of India (UTI), have taken their board approvals and prepared the documentation for drawdown of refinance.

However, the IDBI, during its board meeting on January 31, 2000, laid down two conditions for refinancing the FRN. It told Essar it would refinance the FRN only if the UK-based Stemcor brought in 51 per cent of its equity contribution into Hy Grade Pellets Pvt Ltd (formerly Essar Minerals), which works to Rs 70 crore. It also stipulated that Essar Steel repay its interest and principal overdues to the financial institutions. It also ordered that Essar Steel repay the principal and interest to the financial institutions.

 

As of January 1999, Essar had interest dues to the tune of Rs 420 crore and principal dues of Rs 141 crore.

The group had told the institutions that the debt reduction measure, will pare the company's debt burden by Rs 1,000 crore to Rs 4,500 crore from the present Rs 5,500 crore.