Arvind Mills to restructure debt

By Our Staff Correspondent

MUMBAI, FEB. 5. Arvind Mills (AML) is to go in for debt restructuring which will significantly reduce its debt burden and improve its financial health. A decision was taken in this regard by the directors. The highlights of the plan include a debt buyback, lower interest rates on debt remaining after buyback, sharing of upside in case AML does well and a monitoring and control mechanism by the lenders.

Lenders have to accept or reject the restructuring proposal by February 28 and AML will go ahead with the plan, provided 75 per cent of the lenders approve the plan. The lenders had formed a steering committee who held 58 per cent of its Rs. 2,700 crore debt to hammer out a restructuring proposal. This proposal is the outcome of several meetings and negotiations between the company and the steering committee held over the last one year.

Under the debt buyback, AML will buy a minimum of Rs. 550 crores in debt. All overdue interest would be waived. The buyback price will be in full settlement of the debt. Debt not bought back will be restructured with effect from April 1, 2000.

``This is a complex, unprecedented, one time restructuring plan that, if accepted by the lenders, will quickly put the company back on its rails. We believe that it is a win-win solution for all the stakeholders,'' Mr. Jayesh Shah, CEO of AML, said.

AML is a major international denim player, and went into financial crisis following a sharp drop in global denim prices coupled with huge investments in textile capacities. Mr. Sanjay Lalbhai, managing director, AML said, ``Arvind's fortunes are poised to look up as a result of significant reduction in debt burden on one hand and on the other hand, expected improvement in the operating performance due to rising denim demand, improved capacity utilisation of the new plants and softening prices of naphtha, a fuel used in the generation of power.''

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Section  : Business
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