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The third-party loan comes after SCI decided against contributing a bridge loan of $33 million either in cash or by way of bank guarantee on a request from Mitsui and the Oman Government to retire the original senior loan of $110 million taken from a consortium of banks.

NEW DELHI, May 17

MISTUI O.S.K. Lines and the Government of the Sultanate of Oman will raise a third-party loan of $33 million to meet Shipping Corporation of India's (SCI) share to manage the cash crunch facing Greenfield Shipping Company.

The move comes after SCI decided against contributing a bridge loan of $33 million either in cash or by way of bank guarantee on a request from Mitsui and the Oman Government to retire the original senior loan of $110 million taken from a consortium of banks led by ANZ Investment Bank to part-fund the construction of LNG Laxmi, a 1,37,000 cubic metre capacity LNG tanker.

The bridge loan was to be contributed by all the three joint venture partners in proportion to their equity holdings at 80 basis points above Libor.

"With SCI stating its inability to contribute its share of the bridge loan of $33 million, the other consortium partners have agreed to raise a third party loan of similar amount which would not entail any financial encumbrance on SCI," the sources said.

While declining to contribute $33 million, SCI said that the problem had arisen basically due to the failure of the Oman Government to honour its obligation under the new Time Charter Party agreement signed with Greenfield.

The Government of the Sultanate of Oman was to sub-charter the vessel to its subsidiary, Oman LNG, on a long-term basis.

But this has not happened so far.

SCI has invested $11 million for a 20 per cent holding in Greenfield, a joint venture company registered in the Cayman Islands for owning and operating a 1,37,000 cubic metre LNG tanker for the now controversial Dabhol Power Company, promoted by the collapsed energy trader Enron.

DPC had entered into a 20-year time charter agreement with Greenfield for deploying LNG Laxmi, which was annulled after the charterer failed to accept the vessel upon delivery and open a letter of credit facility.

SCI was also of the view that the demand for contributing $33 million has come at a time when the Government is in the process of privatising SCI.

"As a result, SCI has been asked to put all major investment decisions on hold till the privatisation process is completed," the sources said.

Besides, the new owner of SCI would have to take a commercial decision on whether to invest $33 million or not in Greenfield, the sources stated.

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