The Hindu Business Line : Sical completes Rs 118-cr debt swap

SOUTH India Corporation (Agencies) Ltd has recently completed a debt swap exercise in which HDFC, IDFC and Yes Bank have taken over Rs 118-crore debt from IDBI, LIC and Canara Bank.

Sical also proposes to issue shares to ICICI Bank and HDFC Bank in lieu of their loans to the company, sources in the banks told Business Line.

It is understood that these two banks have each given loans of about Rs 40 crore to the company.

The debt-swap exercise involved a rate and tenor swap — the 15.5 per cent loan, which had a remaining tenor of six years, was converted into a 8.75-per cent loan of a tenor of 12 years, sources close to the deal told Business Line today.

The impact of the move on the company is an immediate interest saving of around Rs 6 crore annually, although the total interest outgo may not change, due to the extended tenor. Still, the advantages to the company are in terms of improved cash flows and the resultant reduction in working capital borrowings.

Sical had debt of Rs 367 crore on its books as of March 31, 2005.

This deal therefore restructures nearly a third of the stock of debt.

Analysts point out that the Sical has mainly two constraints — one, the interest burden arising out of high stock of debt and the other, the burden of non-logistics businesses that came under the company's fold through a series of intra-group mergers between 1995 and 1998. Last year, the company's interest costs amounted to Rs 44 crore.

Sical is addressing the two issues now.

With the debt swap already done and the equity-for-debt exercise that will be done soon, the company's interest burden is slated to come down.

In its announcement to the stock exchanges on Wednesday, the company indicated it might hive off its non-logistics businesses into a separate company.

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