Dewan Group has proposed to sell its cement and sugar companies to settle billions of rupees worth bank loans in an apparent last ditch effort to remain afloat, people close to the development said.
Top Pakistani bankers were set to meet on Friday to discuss whether the four companies should be liquidated or sold to some other business group, which could turn them around to pay off their liabilities, they said.
“The group has over PKR50bn in debt,” a banker said. “In some cases, banks have not received a single installment or interest payment during the last four years. It is about time that they sell their assets to settle our debt.”
Likely outcome of deliberations will be the sale of two cement and two sugar units to recover part of the loans, while the remaining would be paid off by the new owner later, a banker said.
The Dewan Group, which owns 14 companies, has borrowed from almost all the Pakistani banks. Most of its factories are closed as banks have stopped financing working capital.
As of March 2010, Dewan Sugar Mills has accumulated losses of PKR661m, which eroded its paid-up capital by PKR106m. Its current liabilities exceed assets by PKR2.09bn.
Dewan Cement is in a relatively stable position with fixed assets valued at over PKR19bn. The losses incurred by the company are mainly due to the economic slowdown.