BPL debt restructuring plan moves ahead

BPL Ltd's plan to restructure its Rs 1,400 crore (Rs 14 billion) debt seems to be moving ahead, after protracted negotiations and delays.

In a creditors' meet held on Saturday, the majority of the creditors are said to have agreed to the corporate debt-restructuring plan. This paves way for the company to move forward with its joint venture with Sanyo. No comments were forthcoming from the company.

But BPL has to wait for Kerala high court's final nod to the plan as a few of the banks are opposing the plan and are reportedly seeking legal recourse.

BPL, under the CDR proposal, had offered three options to its creditors: the first was for banks and financial institutions to agree to a waiver of 72 per cent of the outstandings. If they concur, it would mean they would have to withdraw legal suits filed against BPL too.

The second option is an upfront cash payment aggregating to 25 per cent of loans and waiver of 50 per cent of the loans with the remaining amount being restructured over an extended period.

Under the third option, 75 per cent of the outstanding will be converted into loans carrying zero per cent interest repayable in 10 years, while the remaining will be spread over an extended period.

If the high court gives its approval for the CDR, BPL will be able to go ahead with its joint venture with Sanyo.

According to senior officials in BPL, there is a necessity to raise Rs 92 crore (Rs 920 million) from a foreign investor to meet the statutory liabilities of Rs 51 crore (Rs 510 million) and unsecured creditor payments of Rs 15 crore (Rs 150 million).

Sanyo after this will pump in its fresh equity into a colour television joint venture signed with BPL last year.

BPL had hived off its core colour television business into a 50:50 joint venture with its long time technology partner Sanyo for a consideration of Rs 322 crore (Rs 3.22 billion) and this money will be used to settle a part of the Rs 1,400 crore (Rs 14 billion) debt.