JK Paper Embarks Upon Major Debt Restructuring
The company looks at lower interest rates for long term loans
The rupees 7240 million JK Paper Ltd has embarked upon a major debt restructuring exercise. The paper maker, which has a secured loan exposure of rupees 4520 million, is likely to refinance a high interest long term loans of rupees 1800 million. It may be recalled that JK Paper had acquired a significant part of the debt when JK Corp`s assets worth rupees 7500 million were transferred to the company in the year 2000-01.
The company will be refinancing some of its high cost debt in very near future. The exercise will involve four- five banks with the long term loan spread over six years. This will bring positive impact on the balance sheet of the company. The company expects savings of rupees 120 million a year and interest outgo was rupees 337.3 million in 2003- 04.
JK Paper is still in the process of negotiating interest rate for the long term loan which likely to be significantly lower than the old debt. With current reserves of rupees 1410 million, paid- up equity share capital of rupees 550 million and preference share capital of rupees 1520 million, JK Paper`s overall loan exposure is rupees 5000 million, including a secured loan of rupees 4520 million.
JK Paper`s current pool of loan fund is largely accounted for by 11 companies, primarily financial institutions. However, for refinancing of rupees 1800 million, it is likely to rope in four- five banks.
The company`s interest and lease rent have increased to rupees 407.8 million in 2003- 04 from rupees 381.3 million in 2002- 03.
