Dhunseri looks to repay debt of its Egyptian petrochem biz

The Dhunseri Group is looking to repay the debts of its Egyptian petrochemical business as it prepares to mount a bid for the assets of Assam Co. India Ltd, which is undergoing insolvency resolution before the Guwahati bench of the National Company Law Tribunal (NCLT).

Dhunseri Petrochem Ltd on Monday said in a regulatory filing that it had entered into an agreement to acquire 23% stake in Egyptian Indian Polyester Co. SAE from state-owned Egyptian Petrochemicals Holding Co.

The Dhunseri Group, which currently owns 70% in Egyptian Indian Polyester, is also likely to buy out the remaining 7% in the firm from Engineering for the Petroleum and Process Industries, another state-owned enterprise, according to two persons familiar with the group’s plans, who asked not to be named.

“We want to start afresh in Egypt,” group chairman Chandra Kumar Dhanuka said but declined to make any further comment.

After Monday’s post-market announcement of its renewed interest in Egypt, Dhunseri Petrochem’s shares plunged 10% on BSE to Rs146.90 each in a flat market on Tuesday.

The company said it will pay for the stake in seven tranches. Two instalments have already been paid, and the total payment is to be completed in five years. Dhunseri Petrochem did not, however, disclose the price it has agreed to pay.

Dhunseri Petrochem was previously seen distancing itself from the Egyptian business. In 2016-17, it sold 65% stake in Egyptian Indian Polyester to an associate company, Dhunseri Overseas Pvt. Ltd, for Rs12.62 crore.

The Egyptian enterprise, in which it is investing again, had outstanding loan of $161.8 million, or Rs1,100 crore at current exchange rate, at the end of March 2016.

Key lenders to the Egyptian venture were International Finance Corp., an arm of the World Bank, Commercial International Bank of Egypt and Ahli United Bank of Bahrain. As the main shareholder, Dhunseri Petrochem had given an undertaking that it would be responsible for repayment of the loans taken by the Egyptian enterprise.

The Dhunseri Group is in talks with lenders to settle outstanding debt. Unless the dues are cleared, it would be barred from bidding for the assets of Assam Co., said the two unnamed persons cited above. The group is again taking an interest in Egypt because crude prices are firming up, they said.

When the Egyptian enterprise was launched, crude prices were hovering around $130 a barrel, Dhanuka said. But soon, prices plummeted, leading to heavy losses on inventory, he had pointed out. Its net worth was fully eroded by December 2015.