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GTL Infrastructure lenders set to convert some part of huge debt to equity

Lenders to GTL Infrastructure have accepted the company's proposal to convert some part of the debt into equity under the strategic debt restructuring (SDR) scheme, bankers privy to the matter told FE.

By: | Mumbai | Updated: September 23, 2016 9:13 AM
On Monday, the company, in a regulatory filing, informed that its board had recommended its lenders to adopt and implement the SDR scheme to reduce the debt to a sustainable level. (Image Source: Website) On Monday, the company, in a regulatory filing, informed that its board had recommended its lenders to adopt and implement the SDR scheme to reduce the debt to a sustainable level. (Image Source: Website)

Lenders to GTL Infrastructure have accepted the company’s proposal to convert some part of the debt into equity under the strategic debt restructuring (SDR) scheme, bankers privy to the matter told FE.

A decision in this regard was taken at the meeting of a joint lenders forum (JLF) held on Tuesday, they said. “At a JLF meeting held on Tuesday, bankers to GTL Infrastructure have decided to convert its debt into equity under the Reserve Bank of India’s (RBI’s) SDR route,” bankers said.

On Monday, the company, in a regulatory filing, informed that its board had recommended its lenders to adopt and implement the SDR scheme to reduce the debt to a sustainable level.

Interestingly, GTL Infrastructure has, till now, serviced its debt on time and is considered a ‘standard’ asset.
According to the company’s annual report, it had a total debt of Rs 4,826.2 crore as of March 2015, and had incurred a loss of Rs 546.3 crore on revenue of Rs 619.3 crore in FY16.

The company’s debt was earlier restructured under the corporate debt restructuring (CDR) mechanism in December 2011. The CDR rupee debt outstanding as on March 31, 2015, was Rs 3,417.5 crore.

Introduced by the Reserve Bank of India (RBI) last year, the SDR scheme allows lenders to a company to pick up a controlling stake in it by converting a part of the debt owed to them into equity.

Until now, it had mostly been invoked in cases wherein lenders had failed to make the management of an indebted company pay its dues after labeling the account as an NPA. However, since that would require them to put aside sums as provision first, lenders are now trying to pre-empt and invoke SDR even in accounts that they fear would soon turn into NPAs. In the previous financial year, Electrosteel Steels became the first company to be taken over by its lenders under the SDR.

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