Restructuring process of Southern Petrochemical Industries Corporation gets a boost

22-May-08
Asset Reconstruction Company of India (Arci) currently controls over 60% of Southern Petrochemical Industries Corporation's debt through the debt aggregation process. This is an important milestone for restructuring the operations of debt-ridden fertiliser company Spic. As per RBI rules for Corporate Debt Restructuring (CDR), Arci needs to have control over 75% of the debtin Spic to better negotiate with the Spic management for a possible bail-out package. In a bid to capture additional stake, Arci plans to approach bankers and initiate a reverse auction. The company has 37 lenders and a total debt exceeding Rs 2800 crore. Spic needs around Rs 350 crore to start its plants. Once Arcil succeeds in increasing its loan exposure, several options get available for restart of operations at Spic. The problem for Spic started way back in the late 1990s when the company had planned a foray into petrochemicals through Spic Petrochemicals to make purified terephthalic acid (PTA) and polyester filament yarn (PFY) facility at Manali, Chennai. It got stuck in litigation after more than Rs 900 crore got locked into it. Initially, Spic knocked the doors of BIFR, then entered the CDR Cell for re-structuring loans. Last year, the plants were shut down for want of working capital.
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