THE hopes of over 800 employees of debt-ridden Southern Petrochemical Industries Corporation (Spic) to

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get back to work may materialise soon as the company is in the final stages of a restructuring plan to restart operations at its Tuticorin plant in southern Tamil Nadu.

The company is likely to begin operations at the fertiliser plant by next month.

An extraordinary general meeting of Spic held here on Monday cleared resolutions for issuing convertible preference shares to the promoter group (M A Chidambaram) and making a preferential share allotment to the Asset Reconstruction Company of India (Arcil).

“Arcil has taken over 80-85 per cent of the liability of the company and we have also sold some of the assets to substantially reduce the debt. We have almost come to the final stages of restructuring plans and are about to restart the plant shortly,” Spic chairman AC Muthiah said.

He also indicated that a meeting of the corporate debt restructuring (CDR) forum would be held on February 24 to discuss the modalities of restructuring plan and for restarting the operations.

Urea production at the Tuticorin plant was suspended in March 2007 because of mounting debt and lack of working capital. Muthiah said the machinery at the plant was capable of resuming operations.

Muthiah also said that agreements had been firmed up with Indian Oil Corporation (IOC) to resume supply of naphtha to the plant. Spic owes around Rs 303 crore to IOC. An escrow account is to be opened as a payment security mechanism to avoid any arrears build up as also to recover dues.

As part of the restructuring programme, the promoters of the company were asked to bring in Rs 150 crore, of which the first tranche of Rs 50 crore is being infused against securities to be issued, which would progressively be converted into equity shares of the company. Ficon Holdings, Mauritius, an existing shareholder and a constituent of the promoter, would infuse Rs 50 crore into the company.

Further, up to Rs 30 crore of Spic’s debt due to Arcil will be converted into equity shares at a price of Rs 18 per share, including a premium of Rs 8 per share in accordance with Sebi regulations.

The promoter group’s shareholding will be 26.90 per cent after the conversion of Arcil’s debt and 40.22 per cent after all the fully and convertible preference shares are converted into equity shares. The outstanding debt of the company is about Rs 2,850 crore.

The company makes some money through the production of ammonia phosphate, gypsum (sold to paper and cement industries) and aluminium fluoride. While the company shifted its corporate operations from Chennai to Tuticorin, it has also shut down its offices in the northern part of country in the past 2-3 years.