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Lenders to infuse $20 mn to save DPC from sinking

Indian and foreign lenders are to release more than $20 million to the embattled US energy major Enron's Dabhol Power Company "in an attempt to save" the company, which is on the verge of bankruptcy.

"As a waterfall arrangement we have agreed to release funds from various preserved accounts for DPC as per the request of its foreign equity holders," a senior FI official said in Mumbai on Wednesday.

The decision was taken at the recent Singapore meeting of the Industrial Development Bank of India led institutions, foreign lenders, DPC, potential buyers Tata Power Company and BSES Ltd.

According to the FI official, DPC managing director K Wade Cline had briefed the lenders of DPC's financial position and sought a bailout. Once resolved the three offshore sponsors (Enron, GE, Bechtel) could agree for signing of the confidentiality agreement for the proposed due-deligence by the Tatas and BSES.

DPC would be able to access the funds ($20 mn), which are to be used for "urgent maintenance, care and preservation (C&P) of 2,184 mw power plant, which began deteriorating since last September and its pending insurance payment," he said.

The beleagured company is facing a serious cash flow crisis and has $8-$10 million in its kitty with liabilities worth close to $30 million, he said adding these fresh funds would also help DPC meet its day-to-day operations and employee expenses.

DPC laid-off its over 150 staff stating that it was compelled to do so due to MSEB's, the Maharashtra Government's and Centre's continuing payment defaults.

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