ABG Shipyards recast deferred; Lancos gets nod

Written by Vishwanath Nair | Mumbai | Updated: Dec 13 2013, 09:25am hrs
A 22-bank consortium for ABG Shipyard has deferred a final decision on the corporate debt restructuring (CDR) package sought by the company, as not all lenders have given their formal consent to admit the case for restructuring, a senior banker said. The case was discussed at banker's meeting at the CDR cell on Wednesday.

Bankers said while the case is likely to be admitted, a mandate from all banks involved has not been received yet. A company official, however, indicated at least 16 of the 22 banks have supported the recast.

The company's R10,039 crore debt recast plan consists of R2,110 crore worth of fund-based exposure, while the rest includes letters of credit issued by various banks. The consortium, led by State Bank of India (SBI), will be discussing the package at an individual bank level, before giving a final approval.

According to a senior official of the company, the consortium of 23 lenders has asked for R250-300 crore as part of promoter contribution to aid the restructuring. If it goes through, ABG Shipyard's recast package will be one of the largest recast packages after Gammon India's R13,500 crore loan restructuring in July.

ABG Shipyard, like many other companies in the Indian shipping industry has suffered due to a fall in freight rates and adverse macroeconomic conditions which has hit demand.

The CDR cell, however, approved the restructuring of Lanco Infratech's R7,500 crore in debt, making it the second largest approval since Gammon India this year. The package includes additional exposure of R3,500 crore from the consortium which consists of R2,500 crore worth of fund-based exposure and the rest in the form of non-fund exposure.

The additional funds will help us pay back our suppliers and creditors and will help to get our business back on track," said a spokesperson from Lanco Infratech.

The approval came by means of a super majority, which means 75% of bankers by value and 60% by number in the consortium, led by IDBI Bank, have agreed to the recast. Interestingly, just a week ago, bankers had indicated they were reluctant to add exposure to Lanco Infratech.

Pradeep Overseas too got an approval for its R1,063 crore recast package, from a 10-bank consortium where SBI is the lead.

According to senior banking officials, no new cases were referred to the cell on Wednesday. However, there is a possibility that some cases may be referred over the next few weeks.

The CDR cell is a banker forum, where lenders meet and discuss the fate of restructuring packages of companies that come to them for easier repayment norms. Over the last three years, the spate of restructuring has risen significantly amongst corporate India, with loans over R76,000 crore being restructured through the cell in FY13 alone.

In the first six months of the current year, loans worth R43,273 crore were approved for restructuring, while R64,830 crore worth of loans were referred to the cell.