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Money > Business Headlines > Report February 2, 2002 | 1220 IST |
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FIs finalise three-pronged strategy for Dabhol recastBS Banking Bureau in Mumbai The financial institutions have finalised a three-pronged package for restructuring the Dabhol Power Company. The three prongs are reduction in interest rates, an increase in the tenure of the loan and conversion of the foreign currency loans into rupee loans. Industrial Development Bank of India chairman and managing director P P Vora said, "The package for DPC is being worked out. It will include restructuring of loans by institutions, reduction of rate of interest and also an offtake of power by Maharashtra government. We are also examining the possibility of converting a majority of the foreign currency loans into rupee loans. The government has also said that they will continue to abide with all the guarantees given for the Phase I of the project." The confidentiality agreement has also been signed by three of the six bidders. The FIs are set to appoint a financial advisor for the DPC deal which would include the restructuring of loans. Around 70 per cent of the loans are in foreign currency. According to IDBI executive director A K Doda, "Most of the foreign currency loans will be converted. This will make our cost stable and also help in reduction of the power per unit." The current rate of interest on the rupee loans is 16.5 per cent. Domestic lenders have a Rs 61-billion exposure to the project-- IDBI Rs 23 billion, State Bank of India Rs 18 billion, and ICICI Rs 17 billion. The foreign lenders have an exposure of $550 million in the project. The cost of power is expected to come down to less than Rs 3 per unit. Though both officials refused to comment on the reserve price which was set for DPC, sources said that the price is around the $400 million mark. The bids for the DPC will be closed on February 7. The due diligence of the first batch of bidders will start off from February 5 or 6 when the data rooms will be opened. Two bidders will simultaneously start off the process, Vora said. Lenders have formed a committee consisting of Indian lenders-- IDBI, ICICI, SBI-- and OPIC, Bank of America and Citibank. They are also set to appoint a financial advisor for the whole process, said Doda. YOU MAY ALSO WANT TO READ:
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