HPL cash wait lengthens

Calcutta, Feb. 1: The Bengal government and The Chatterjee Group (TCG) have turned down the demand of the lenders of Haldia Petrochemicals to convert part of its loan into equity.

The lenders had sought the conversion of about Rs 115 crore worth of loan to equity at the face value of Rs 10 as one of the main conditions for releasing fresh funds to the ailing petrochemical firm.

Even as the lender put the condition under a corporate debt restructuring proposal of 2004, the state government at today's board meeting objected to the conversion at face value.

Private investor TCG has been against the conversion as well as it feels it would lead to dilution of equity.

Later, Bengal industries minister and HPL chairman Partha Chatterjee said the government did not reject the proposal outright.

"I have told them (lenders) to give us eight months. Meanwhile, I requested them to part with Rs 1,000-crore loan so that the company can be put back in shape," Chatterjee said.

He later suggested that the lenders would be given equity at a price discovered through the auction of shares initiated by the West Bengal Industrial Development Corporation (WBIDC).

The WBIDC has appointed Deloitte as the adviser for the share sale.

The minister said the auction would be completed by June this year.

He said the members of the financial institutions had agreed to take the minister's proposal to their respective boards. "They may or may not accept our proposal. Let us see," he added.

After the board meeting, TCG chairman Purnendu Chatterjee also confirmed that the lenders had been requested to release Rs 1,000 crore.

"In the absence of funds, the company's performance is being impacted," Purnendu said.

Sources said Purnendu had written a letter to the company, WBIDC and lenders that he was willing to bring in Rs 500 crore if he was given management control.

Lenders asked why the company could not bring in money without control to save the firm.

The industries minister indicated that the WBIDC might consider offering sops, if required.

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