DoD likely to seek fresh restructuring package for HCL

NEW DELHI: In a bid to enthuse bidders to buy out government equity in loss making Hindustan Copper (HCL), the Disinvestment Department is expected to seek a fresh restructuring package to the tune of Rs 550 crore for copper major.
The need for a bail out package was felt at an inter- ministerial meeting on disinvestment held recently to review the progress in the matter, sources said.
Global advisors AF Ferguson had advised the meeting that bidders had suggested another round of financial restructuring to be in a position to bid for the company.
Disinvestment Department would now place the proposal before a meeting of core group on disinvestment (CGD) prior to finalising a cabinet note for the same.
The package being sought would go towards funding another round of voluntary retirement in addition to the ongoing scheme.
A sum of Rs 360 crore is being sought for bringing down the employee strength to around 3,000 from the current 9,000 odd workmen.
Another Rs 180 crore would be needed for the purpose of converting preferential capital into equity.
Government would divest its entire 98 per cent equity in HCL to a strategic partner along with management control.
As many as four bidders had evinced interest in the company including Birla Copper, Sterlite Industries, Metdist and Finolex Cables. However Finolex group along with Metdist dropped out later.
The new package also envisages seeking fresh warranties as well as solidifying environmental clearances and mining leases.
Government had earlier aborted an attempt at privatising the company by hiving off the Khetri and Taloja units of the company into a separate undertaking where strategic partner would pump in 51 per cent equity.
It had also replaced the global advisors IDBI-Sumitomo Bank with Ferguson group.
Bidders had expressed reluctance at that time to take on the two units as the company was faced with huge debt liability and workforce.
HCL is currently in the midst of an organisational restructuring exercise envisaging closure of unviable units including the copper mines at Ghartshila in Bihar.
Disinvestment Commission had earlier recommended sale of the company on an as is where is basis, alternatively it had suggested sale of 51 per cent equity after infusing Rs 600 crore for modernising the company.