The readers of PrintWeek India will recall that BILT's total debts have amounted to Rs 6,000 crore. About six mutual funds are holding the bulk of these securities which are floated by companies to raise short-term debt.
The proposed sale is aimed at reducing the load on BILT, more than a decade after Thapars conceived an ambitious global expansion plan. In 2007, BILT had acquired Sabah Forest Industries for USD261 million.
According to reports, Ballarpur Paper Holdings had entered into a share sale agreement for selling its 98.08 per cent equity in Sabah Forest Industries. Since then, this date has been postponed thrice. 31 March 2016 is the new deadline.
Gautham Thapar, chairman of BILT made a statement in 2015 in which he attributed the sluggishness to "three negative forces". The first, Thapar said was external which was "inadequate demand growth in India coupled with considerable excess capacity in China, ASEAN countries, as well as in India led to a veritable glut in supply of paper and a resultant sharp drop in prices."
Thapar attributed two other factors to internal reasons primary among which was the pulp production in Sabah which has been affected by the breakdown in the wood chipping facility between September and November 2014. Consequently, it produced 19% less bleached pulp and 11% less of paper. In addition, "BILT's rayon grade pulping facility at Kamalapuram which has continued to be badly affected and found itself unable to compete with the landed price of imports into India."
Thapar added, "In fact, market conditions were such that all operations were suspended from 2014. (And) Without active fiscal assistance from the state government of Telengana, it is unlikely that the facility can re-start operations."
A statement by a BILT official said, "The banks are awaiting the closure of the Sabah Forest deal which would help BILT to deleverage its balance sheet significantly - by about Rs 2,500 crore. There are no reasons for either banks or mutual funds (which have invested in our CPs) to be concerned."