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NLC to consider buyback, issue Neyveli bonds

M. Ramesh

NEYVELI, Nov. 25

NEYVELI Lignite Corporation (NLC) has dropped the proposal for reducing (halving) its capital and has instead chosen the route of share buyback to achieve the same end.

However, a senior official of the company had told Business Line that the board was yet to meet to consider clearing the buyback proposal.

Earlier, NLC had wanted to reduce its paid-up equity (of about Rs 1,800 crore) through the `Section 100' route -- where shareholders would be paid back a part of the capital.

Sources said the buyback method was better, considering the tax implications.

Sources also said that the company was thinking of coming out with a bond issue (which might be called `Neyveli Bonds'), perhaps for Rs 300 crore with a greenshoe option of Rs 100 crore.

The bond issue is a part of NLC's Rs 800-crore borrowing programme, for which it has already obtained a rating from ICRA.

Earlier this month, the rating agency assigned a rating of `LAAA (L triple A)' for NLC's `long-term debenture programme', taking into consideration.

``NLC's efficient and cost-competitive power generating operations, low feed stock risks, low levels of financial risk and the Government ownership''.

The Centre owns 94 per cent of NLC's equity.

NLC sources also said that Andhra Pradesh and Karnataka had agreed to issue bonds against their dues to NLC.

Discussions were on with the Tamil Nadu Government for a similar arrangement, they said.