A United Kingdom-based strategic investor is tipped to buy a minority stake in LML Ltd. The company is most likely to use the proceeds to pay off its lenders.
LML Ltd is readying to make a one-time settlement with its consortium of lenders for its total dues of about Rs 230 crore. A meeting of lenders has been scheduled for January 3, in New Delhi.
Rakesh Jayal, executive director, LML, told Business Standard: "We are in the process of restructuring or settling our existing debt. As part of this exercise, we require additional debt and equity." He refused to spell out details of the proposed scheme.
IFCI leads the consortium of lenders, which includes IDBI, ICICI Bank, IIBI, Exim Bank, State Bank of India, Bank of Baroda and Corporation Bank. The facility has been classified as bad debt in the books of most of the lenders.
The company is expected to repay the lenders with the money the UK investor will pump in. The promoter group would sell some of its holdings to the new investor, said sources.
The Indian promoters hold a 49.9 per cent stake in LML. The public holding in the company is pegged at 37 per cent. Private corporate bodies hold another 5.63 per cent and NRIs/OCBs, 6.36 per cent.
Sources among one of the lenders said: "Finally, the settlement will depend on the conditions that the investor asks for. It appears that the investor wants to invest in a debt-free LML. Foreign investment is certainly welcome in this case since it may be able to provide the company with a competitive advantage."
A few months ago, a foreign investor was ready to pick up a stake in LML provided the lenders restructure the loans. Corporation Bank, one of the lenders, put a spoke in the wheel because it was not ready to restructure the loan account.
The company's scooter business has been ailing for quite some time but the motorcycle business is doing well with the new Freedom bikes. LML is shifting its focus from scooters to motorcycles and aiming to ramp up its motorcycle production capacity.
The company posted a net loss of Rs 76.3 crore for the accounting year ended September 2004 on net sales of Rs 448 crore.
