Source:  fe Bureaus , Mar 24, 2010 at 2341 hrs IST



Chennai: Cash-strapped fertiliser major Southern Petrochemical Industries Corporation (Spic) has sold its entire 52.17% stake in Indo-Jordan Chemicals Company Ltd to Jordan Phosphate Mines Company Ltd (JPMC).

JPMC, which is a partner in the Indo-Jordan Chemicals Company joint venture, has bought the stake for a consideration of $50.6 million (nearly Rs 230 crore).

Indo-Jordan Chemicals Company is a three-way joint venture between Spic, JPMC and Asia Investment Company SAA.

The company has entered into an agreement for the sale of its 2,31,63,000 equity shares of Jordan dinar 1 each aggregating 52.17% in the joint venture firm Indo-Jordan Chemicals Company with Jordan Phosphate Mines, Spic said in a regulatory filing on Tuesday.

Spic is believed to have pumped around Rs 170 crore into the Indo-Jordan Chemicals Company joint venture in early 1990s. However, company sources were not available for comment.

Spic is expected to utilise the fund incurred via stake sale to restart its Tuticorin plant, which has been almost defunct for close to three years for want of working capital funds and supply of key feedstock---naphtha from IOC. IOC stopped supply to Spic since the company owes the oil behemoth over Rs 370 crore in arrears.

The Jordan JV was set up mainly to source phosphoric acid and sulphuric acid to Spic's plants in India but had to stop the production few years ago owing to mounting payment dues from Spic.

Saddled with a debt of around Rs 3,000 crore, Spic has been struggling to restart its operations at Tuticorin as the banks and financial institutions moved the Debt Recovery Tribunal (DRT) to recover their dues which later took a legal turn hitting the production at its Tuticorin plant. Meanwhile, most of the banks and financial institutions sold their non-performing assets of Spic to Asset Reconstruction Company of India Ltd (Arcil). Arcil currently manages close to 85% of Spic's bad debts.

Recently, Arcil converted its Rs 30-crore loan to Spic into equity for a little over 13% stake in Spic. Arcil also sold some of the assets of Spic to raise funds in a bid to meet the working capital requirements of the company and also asked the promoters to bring in Rs 50 crore initially to start the Tuticorin plant, which has a capacity to produce 7 lakh tonne of urea and 5 lakh tonne of DAP. The company at least needs a minimum of Rs 500 crore to meet the working capital expenditures...