Leading financial institutions and banks have served an ultimatum to the government that they would be left with no choice but to approach Debt Recovery Tribunals (DRTs) if there is any further delay in the acquisition of Aditya Birla Group’s stake in Mangalore Refineries and Petrochemicals Ltd (MRPL) by the Oil and Natural Gas Corporation (ONGC). FIs and banks have a debt exposure of around Rs 5,500 crore in MRPL.ONGC, in August this year, had executed a share purchase agreement with the Aditya Birla Group (ABG) wherein it agreed to purchase the latter’s 37.39 per cent equity at a price of Rs 2 per share aggregating to Rs 59.43 crore.Alongside, a debt-restructuring package (DRP) was also worked out by the lenders wherein it was agreed that ONGC would infuse Rs 600 crore in the form of equity and hold a majority stake of 51 per cent in MRPL. However, the DRP cannot be implemented till the government clears ONGC’s deal with the Birla’s.Top FI sources said that the lenders fear that the ongoing delays in implementation of DRP may result in total erosion of net worth of MRPL, with consequent reference to DRT. The concerns of the lenders, sources said, have been conveyed to both ONGC and the ministry of finance. Says ICICI, in a recent letter to the ministry of finance, ‘the lenders have been very proactive in approving ONGC’s debt restructuring package and continue to classify the loan exposure to MRPL as standard. However, any delay in ONGC’s entry and consequent delay in implementation of the DRP would impact the asset quality of the entire consortium of banks and financial institutions, who have lent monies to MRPL, causing an undue strain on their financials. An early approval may therefore be accorded to ONGC for acquiring ABG’s stake in MRPL.’ICICI is heading the consortium of 22 lenders having a massive debt exposure in MRPL. The debt exposure of ICICI in MRPL stands at Rs 851 crore while IDBI has Rs 898 crore of funds stuck in this project. State Bank of India has an exposure of Rs 639 crore in the project followed by Bank of Baroda at Rs 393 crore, Bank of India at Rs 322 crore, IFCI at Rs 220 crore, Punjab National Bank at Rs 205 crore, Corporation Bank at Rs 150 crore and Union Bank of India at Rs 106 crore. Put together, the total debt to MRPL by the lenders is over Rs 5,500 crore.Sources said the lenders have already committed to take significant write-offs in interest liabilities and reductions in interest rates to salvage the refinery from becoming a non- performing asset. Out of the term loans of MRPL, aggregating about Rs 1,375.44 crore as on March 2002, an amount of Rs 600 crore will be retired out of fresh equity infusion by ONGC and the balance was to be restructured. However, this will be done only after ONGC’s investment in MRPL is cleared by the Centre.
