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IDBI denies bailout to Essar in FRN issue

The Industrial Development Bank of India did not heed to the plea of the Essar Steel group of sanctioning a fresh assistance of $ 104 million so that the Essar Group could honour the part redemption committment to its floating rate notes or FRN-holders.

According to chairman G B Gupta, IDBI, the lead financial institution in the country, has ruled out any further funding committment unless the company undertakes a major restructuring programme and turns around its operations from continuous loss-making.

We have given several suggestions and conditions, but the company continued to make sizeable losses, he observed. Even when the steel sector is doing well, the company incurred losses of Rs 4 billion in the last nine-month period, he said.

Today's IDBI stand on the FRN issue will leave the Essar management with no choice but to go back to the noteholders seeking more time or draw up a fresh redemption package. The deadline for repayment to note-holders who opted for the exit route (five weeks ago) expires tonight (January 31).

UNI

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