Bilt Paper parent in talks to raise about Rs400 crore

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Mumbai: Bilt Graphic Paper Products Ltd (BGPPL), a unit of Ballarpur Industries Ltd (BILT), is in talks to raise around Rs400 crore from Deutsche Bank and Goldman Sachs India in a structured credit transaction, two people aware of the discussions said on condition of anonymity.

“BGPPL has been on the lookout to raise funds to infuse working capital after attempts to sell two of its units to rival JK Paper failed due to mismatches in valuation,” said one of the two people cited above.

Both Deutsche and Goldman are in talks to jointly lend to Bilt Paper, said the second person.

“The talks are still early and the terms of the loan which will have an equity upside are still being discussed,” the person said. “Bilt Paper is primarily looking to raise short-term debt, which is typically less than a year, extending up to 364 days.”

Spokespersons for Deutsche Bank and Goldman India declined to comment on the story, while an email sent to Bilt Paper remained unanswered till the time of going to press.

In November, Mint had reported that talks between Bilt Paper and JK Paper Ltd to sell two units at Ballarpur and Asthi in Maharashtra had reached a dead-end because of disagreements on valuation.

In July, JK Paper had made a preliminary non-binding offer to acquire the two factories which make pulp, paper, paperboards and other paper products.

Ballarpur Industries is the flagship company of the Avantha Group and is one of India’s largest producers of writing and printing paper.

The company’s subsidiaries include Ballarpur International Graphic Paper Holdings B.V. and Sabah Forest Industries, Malaysia’s largest pulp and paper company.

Bilt Paper has six manufacturing units across India.

For the year ended 31 March, the company reported net sales of Rs4,221 crore with an Ebitda, or earnings before interest, taxes, depreciation and amortization, of Rs732 crore, but paid an annual interest Rs463 crore.

For the quarter ended 30 September, the company’s revenue halved to Rs438.31 crore from Rs919.29 crore.

Bilt Paper has been facing acute working capital shortage, forcing the company to shut a few units, the people cited above said. According to its latest corporate filings, BILT has a consolidated debt of over Rs6,300 crore.

According to India Ratings, BILT will need refinancing to fund its debt obligations, which have accumulated largely due to the underperformance of its Malaysian operations and a weakening demand for paper globally.

The financial woes of Avantha Group are not limited to BILT alone. According to Brickwork Ratings, Avantha Holdings Limited (AHL), which is the group holding company reported a loss of Rs301.75 crore in FY16.

In 2014, Avantha Power sold its Korba power plant to Adani for Rs 4,200 crore. In an interview to CNBC-TV18, B. Hariharan, Group CFO of Avantha said that the group is looking for a buyer for its second power plant to cut debt further.

Another group company, Crompton Greaves Ltd (CGL), which is present in power systems, industrial systems and consumer electrical products reported losses to the tune of Rs395.52 crore in FY16 compared to a profit of Rs23.45 crore in FY15.

In December last year, The Times of India reported that Avantha Holdings is close to winning a Rs1,400-crore ($210-million) financing deal from KKR & Co. to refinance existing short-term debt and revoke pledged shares. The funding support will help the holding company to boost growth, the report said.