State-run miner Coal India Limited (CIL) plans to convert preference shares of its loss-making subsidiary Bharat Coking Coal Limited (BCCL) into equity shares to prevent it from heading to the bankruptcy tribunal because of default. CIL had given loans of Rs 2,540 crore to its subsidiary for working capital and investment requirement to keep it afloat. However, when BCCL could not repay, CIL in 2013 converted the dues into 5 per cent cumulative, non-convertible and redeemable preference shares of face value rs 1,000 each. The shares were to be redeemed by CIL on April 1this year. The subsidiary is also required to pay interest of about rs 880 crore.
"Although BCCL is no more a loss-making company, accumulated losses in excess of rs 2,100 crore have impacted its ability to pay the amount," said a senior CIL executive. "If allowed to default, BCCL will have to be referred to the NCLT according to norms. In an effort to save the company from getting referred to the tribunal, CIL is looking at the possibility of converting the preference shares to equity shares."