Haldia Petrochemicals converts debt to equity to shield from BIFR reporting

The HPL board has cleared a proposal to convert debt to the tune of Rs 128 crore into equity in at par basis (Rs 10), Now the lenders will jointly own "about 8% stake" in the company. This is an attempt to help the company avoid reporting to BIFR. Speculations abound that the company might have to report to the Board for Industrial and Financial Reconstruction (BIFR) as a potentially sick company by the end of this financial year, as it has accumulated a huge loss of more than Rs 1,000 crore, against a peak networth of Rs 2,844 crore. Main lenders of HPL are IFCI, IDBI Bank, ICICI Bank, PNB, SBI, Allahabad Bank and Union Bank of India. The total debt of HPL is about Rs 3,700 crore. A decision on the representation in the board from SBI and Indian Oil, another important shareholder, will be taken up in the next board meeting. In yet another development, sources said WBIDC will provide preferential equity to the Rs 200 crore butiene-1 project planned by the company.
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