Kanoria Chemicals & Industries Ltd (KCIL) has finalised a major financial restructuring plan involving a complete swap of existing high cost debt of around Rs 92 crore with fresh low interest foreign currency and rupee loans. This will bring down the average interest cost from 14.25 per cent to 9 per cent.In another development, the company is also looking at participating in the bidding process for acquisition of loss-making Punjab government-owned Punjab Alkalies & Chemicals Ltd (PACL). The Punjab government has put PACL up for sale in its disinvestment programme.KCIL is also restructuring its working capital loans of around Rs 25 crore by replacing short-term debt with medium-term foreign currency loans which will bring down the interest rate from around 10 per cent to 5.40 per cent. The financial rejig also includes redemption of preference shares worth Rs 10 crore.KCIL’s chairman and managing director RV Kanoria, when contacted, confirmed these developments. Kanoria has also been authorised by the board of directors to take a final decision on participating in the bids for acquisition to PACL but he declined to comment on the company’s plan in this regard.Kanoria said the debt restructuring programme would result in a saving of Rs 19 crore in interest costs over the next six years. The company has a natural hedge of equivalent exports against any future appreciation in the value of dollar against the rupee.The company is also pre-paying existing debt of around Rs 12 crore to domestic financial institutions (FIs). The total debt of the company will, however, increase to Rs 100 crore since fresh loans of Rs 20 crore are being taken to finance expansion of formaldehyde production facility and setting up of new water treatment chemicals manufacturing facility.
