Essar Steel To Okay CDR Scheme At June 6 Meet

Mumbai, May 20: | Updated: May 21 2003, 05:30am hrs
As part of Essar Steels (ESL) corporate debt reconstruction (CDR) scheme approved by the financial institutions (FIs), the company is convening a meeting on June 6, to consider and approve the scheme of arrangement and compromise with its secured term-debt creditors and working capital debt creditors.

The company informed The Stock Exchange, Mumbai (BSE) that by an order dated May 9, passed by the Gujarat High Court at Ahmedabad, the court has directed that a meeting of the secured term-debt creditors and working capital debt creditors of the company be called and convened for the purpose of considering and, if thought fit, approving, with or without modifications, the scheme of arrangement and compromise of Essar Steel with its secured term-debt creditors and working capital debt creditors.

Earlier on, to resolve its defaulted $250 million floating-rate note (FRN) issue, the company had proposed either redemption at a huge discount of $240 for every $1,000 note held or a rollover through issue of fresh notes at a considerably low coupon rate of 0.25 per cent.

According to a company communique to its FRN-holders, the proposed rollover scheme will have the new notes carrying a fixed coupon rate of 0.25 per cent, as against the coupon rate of libor plus a floating rate of 200 basis points at the time of the issue of the old notes.

Essar Steels move to settle its FRN issue follows FIs announcement of a CDR package for three steel companies, including Essar Steel.