The Hindu Business Line : Apollo Tyres in talks again to buy Modi Rubber

APOLLO Tyres has revived efforts to acquire the manufacturing facility of the beleaguered Modi Rubber. Top officials of both the companies jointly met the creditors of Modi Rubber today to seek their support for the proposed deal.

According to sources, creditors were told that part of their outstanding dues of about Rs 25 crores would be paid immediately if they withdraw the pending cases.

When contacted by Business Line, Mr Sunam Sarkar, Chief, Strategy and Business Operations, Apollo Tyres, declined to get into specifics, but confirmed that Apollo has been in talks with the promoters, creditors and other significant players to convey the company's intent of acquiring the plant.

" We have been negotiating for the past two years. Our interest remains in the acquisition of the manufacturing facility of Modi Rubber and not the company as a whole", he said.

Sources said creditors who attended today's meeting include Degussa, Tata Steel, Continental Carbon, ICI Rubber Chem, Philips Carbon, Bripranil, Arti Steel, Madura Coats and Insilico.

An official representing one of the creditors admitted that Apollo tyres had offered to pay around 25 per cent of total outstanding dues if the creditors agreed to drop their cases. In fact, they wanted the creditors to sign an undertaking to this effect, which did not happen, as the offer was not attractive enough to the creditors.

"When the initial discussions fell through, we understand that they approached all the creditors separately and may have entered into separate deals with them. In some cases, they even said they would pay back the dues on an instalment basis. But as of now, nothing has been decided. However, the feedback seems to be that they are not entirely happy with what Apollo tyres is offering, so it remains to be seen how things turn out", said an official representing one of the creditors to Modi Rubber.

Sources said since Modi Rubber's application is pending with the BIFR, the promoters want to sell the company before BIFR takes charge. "If they get the requisite number of creditors to agree to the deal, they can approach BIFR and be in the clear for a takeover by Apollo Tyres", said a source.

"Besides, once BIFR takes charge, the promoters will lose control over the company. So they would like to close the deal as soon as possible, when they can still make some good profit from their holding", he said.

Meanwhile, some of the creditors admitted that they are worried, since they are also vendors to Apollo Tyres, they may be constrained to accept whatever is offered to them, as it may otherwise affect their relationship with the company.

However, sources said, that Apollo Tyres had made it clear right at the outset of the discussions, that whatever decision the creditors took would be independent of their relationship as vendors with the company.

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