Financial institutions led by IDBI have opposed the Ispat group flagship Ispat Industries Ltd’s restructuring plans of its $125 million (Rs 625 crore) convertible bond due to the company’s default on repayment to lenders.In a notice to the BSE, Ispat said it ‘has informed an ad hoc committee of bond-holders that consideration by the board of the financial restructuring terms agreed with the committee in December 2001 has been indefinitely deferred in response to representations made by certain board members that are nominees of Ispat’s senior lenders.’Ispat had in April 2001 defaulted on repayment of its US $125 million convertible bonds on their maturity to a consortium of bond-holders led by ANZ Grindlays. ‘‘When Ispat informed IDBI about the default there were certain objections raised by the FIs in the last board meeting, hence, they blocked the restructuring by deferring it indefinitely,’’ sources added. The proposed restructuring provided for repayment of past interest due over next 18 months with an extended maturity to December 31, 2009. The semi-annual cash interest payments range between three per cent and 4.5 per cent and annual principal payments are scheduled in the years 2006-09.Ispat has said that it has negotiated definitive legal documentation to an ‘advanced’ level in conjunction with the trustee company of the bond-holders. The proposed restructuring documentation was to be put forward to the bond-holders by the end of last month, which was delayed as the board’s approval could not be obtained. Ispat Industries has been in trouble for quite some time now. Currently the FIs are in a strong position to call the shots in the company’s decision-making. As per the shareholding pattern of the company on March 31, 2002, banks, FIs and insurance companies together hold 25.69 per cent, the promoters stake is 54.45 per cent which includes 47.72 per cent of foreign promoters.Ispat had last year sought the shareholders’ permission to convert Rs 310 crore term loan into equity shares at par value of Rs 10. Lenders were set to take a big hit as its share price was quoting below one rupee —90 paise to be precise—on the BSE. The Ispat loan conversion would have led to a straight hit of nearly Rs 280 crore for FIs as per the then market prices. However, the government told FIs to drop the plan.
