SPIC rolls over $ 120 mn FRN issue

SPIC rolls over $ 120 mn FRN issue
ENS ECONOMIC BUREAU

MUMBAI, FEB 14: Yet another Indian company which defaulted on overseas bonds has opted for the roll-over option to avoid immediate repayment. Chennai-based fertiliser firm Southern Petrochemicals Industries Corp (SPIC), run by AC Muthiah, has managed a five-year rollover on its floating rate notes (FRN) worth $120 million, the firm's financial adviser Bank of America Securities LLC said on Wednesday.

The company had earlier failed in servicing its FRNs and Banc of America Securities had stepped in. SPIC is the second company which defaulted on FRN repayments after Essar. The latter had last year rolled over payment of FRNs to overseas investors.

Bank of America Securities said the FRN, due in 2003, had a put option in January 2001, and SPIC was able to get a new rate of 150 basis points over LIBOR on the restructured debt, 100 basis points lower than the original rate. SPIC mainly manufactures agricultural inputs, including fertilizers, and also has interests in petrochemicals.

SPIC posted a net profit of Rs 31.904 crore for the September-December period, a six-fold jump thanks mainly to one-off income Rs 73.02 crorefrom sale of its equity stake in a US joint venture.

Spic will start servicing the principal amount from April 19, 2002. The new coupon rate at 150 bps is lower by 100 bps contracted at the time of the original transaction: 250 bps. "The transaction was completed within six months of commencement of negotiations, and saw full participation by noteholders", BankAm added.

Spic' $120 million FRN had a "put" option in January 2001. SPIC has investment facilities in India and abroad, and the backing of technology and collaboration arrangements with world leaders in their respective fields. It is among the front-ranking industrial conglomerates in India with a turnover of about Rs 2,800 crore.

Spic has diversified businesses, which operate through its global divisions and associate companies. Of late, Spic sold its stake in its joint-venture with Pioneer Hybrid, and interests in heavy chemicals to Tamilnadu Petro Products.

Ispat's turn next?

MUMBAI: Euro Convertible Bonds (ECBs) worth $ 122 million issued by Ispat Industries will mature for redemption on March 31, 2001. As Ispat is already a defaulter in domestic debt repayments, the group had approached financial institutions for fresh loans to pay off the ECBs.

"Ispat will have to work out the repayment strategy within a month's time. Otherwise foreign investors will see the third default by an Indian company abroad," corporate sources said, adding, "it's to be seen whether FIs will take the liability of Ispat in their books."