ABG Shipyards R1,300-crore loan in limbo as norms not met

Written by Shayan Ghosh | Updated: Sep 2 2014, 06:46am hrs
Surat-based ABG Shipyards loan of R1,300 crore is in a limbo as bankers have put additional funding on hold, citing non-compliance with norms mentioned in the corporate debt restructuring (CDR) package.

Lenders, who spoke on the condition of anonymity, said company promoters had to pledge their shares and were told to exit an investment of R236.4 crore (as per FY13 data, which is the latest available) the firm had made in the Emerging Markets Diversified Fund of Standard Chartered Trust (Cayman). The promoters failed to comply with this and sought more time.

Bankers who met last month decided that, for the time-being, they might release R650 crore in the next two months on a priority basis for the companys working capital requirements. An email sent to the company seeking comments went unanswered. The ABG Shipyard scrip ended down 0.85% on the BSE on Monday at R234.45.

As on June 30, ABG International owns 67.29% of the company, chairman Rishi Agarwal 0.55% and Kamlesh Kumar Agarwal 0.18% shares. As per regulatory filings, the promoters have pledged close to 93% of their holding.

The restructuring package, worth a whopping R11,000 crore, was cleared by a consortium of 22 lenders, led by ICICI Bank, earlier this year. The company's net debt at the end of FY14 stood at R4,583 crore and bankers said the rest was in form of non-fund-based exposure, including guarantees. Analyst reports say ABG Shipyard had R2,500 crore in short-term debt, R1,100 crore in long-term debt and R7,100 crore in working capital loans in FY14.

As per the CDR package, the company was given 10 years to repay the loan, with a moratorium on interest payments of two years. The ABG recast was referred to the CDR cell in the October-December period, which saw referrals of R45,000 crore. For the three months ended June 2014, the company reported a net loss of R56 crore on the back of R266 crore in revenues as its profits were dragged down by R176 crore of interest expenses.

Interest expenses were R123 crore in the same quarter of the previous financial year. In FY14, ABG Shipyard saw a net loss of R199 crore with interest expenses at R609 crore.