The AC Muthiah Group may be forced to sell a part or whole of its stake in the group flagship company Spic, if the company? s lenders have their way. The bankers have forced the promoters of the beleaguered company to agree to the stake sale plan, as a pre-condition for opening fresh Letters of Credit (LCs) to fund its working capital needs. Spic owes over Rs 2,600 crore to a consortium of banks led by Indian Bank.
Consultancy firm Ernst and Young (E&Y) has been appointed to value the assets of the company and the AC Muthiah Group is expected to firm up the divestment plan soon. Sources in the know told FE that the bankers of the company had not given any choice to the promoters of Spic but to sell their stake in the company to pay back the outstanding debt. Lenders had put the company in a tight spot recently by refusing to open fresh LCs, forcing the management to stop production for over three months. The bankers relented only after the promoters agreed to the stake sale plan.
?Spic has been approaching banks with vague OTS (one time settlement) proposals for the past few years. However, this time, the bankers put their feet down and asked Spic to appoint an agency to value the assets of the company before finalising the OTS?, sources said.
Promoters could either exit the company by putting their entire shareholding on the block or bring in a strategic partner by partly divesting their stake. The lenders, it is learnt, are open to both the ideas. E&Y has already submitted the report and now the promoters, in consultations with lenders, have to decide on the mode of divestment.
The AC Muthiah Group holds 31.05% stake in Spic while the Tamil Nadu Industrial Development Corporation (Tidco) ? the other promoter of the company ? holds 8.19%.
