HNG raises Rs 1,600-crore debt funding from Cereberus, World Bank’s IFC

This funding could further provide momentum to HNG which is already the largest glassmaker in India

Glassmaker Hindusthan National Glass (HNG) has raised Rs 1,600 crore in debt funding from US private equity investor Cereberus and World Banks’ International Financial Corporation(IFC), people with direct knowledge of the matter have told Moneycontrol.

While Cereberus invested Rs 1,300 crore with tenure of 18 months and a coupon rate of 19 percent, IFC  subscribed to debentures to the tune of Rs 300 crore for a tenure of three years at a coupon rate of 12 percent, the sources said.

This is the first round of funds HNG has raised after its acquisition by INSCO, which is owned by the  Africa-based Madhvani family, through Insolvency and Bankruptcy Code (IBC).

The funding could further provide momentum to HNG, which is already the largest glassmaker in India. According to documents filed during the IBC process, HNG held nearly 40 percent market share, with the company supplying glass to some of the big multi-national companies (MNCs) along with domestic clients.

AGI Greepac is the second-largest glassmaker in India and was in race to acquire HNG. However, the Supreme Court turned down AGI’s resolution plan as it did not have the approval of the Competition Commission of India.

“Since 2014 HNG has suffered with shortage of capex investments due to high debt levels and INSCO’s revival plan is intended to revive the production and efficiency by upgrading the seven manufacturing facilities HNG has,” one of the persons cited above said. “Also, this is IFC’s first ever stressed asset investment in India,” the person added.

An email sent to Cereberus remained unanswered, while IFC declined comment.

"We do not wish to comment on financial investors. However, with respect to the revival process, we would like to emphasise that employees and workers form the backbone of any successful turnaround. We remain fully committed to working closely with them to shape a sustainable growth path. Their experience and inputs will play a pivotal role in our revival strategy," an INSCO spokesperson said in response to Moneycontrol's queries.

HNG’s insolvency was one of the few cases where the recovered amounts were more than 50 percent of the outstanding loans.

It defaulted on loans worth Rs 3,839 crore and the Madhvanis (via INSCO) paid Rs 2,257 crore, implying a recovery rate of about 59 percent. AGI Greenpac and INSCO were at loggerheads during the IBC process with both accusing each other of irregularities.

According to various reports, HGIL’s new chairman Shrai Madhvani and new board members visited various manufacturing units to take a stock of the situation.