1. Reliance Defence gets empowered group nod to exit CDR scheme

Reliance Defence gets empowered group nod to exit CDR scheme

Reliance Defence and Engineering (RDEL) today said it has received CDR empowered group's approval to exit the debt refinancing scheme.

By: | New Delhi | Published: May 2, 2017 4:40 PM
Reliance Infra-controlled RDEL has received approval from the CDR empowered group (CDR EG) for exiting the CDR scheme. (Reuters)

Reliance Defence and Engineering (RDEL) today said it has received CDR empowered group’s approval to exit the debt refinancing scheme. Reliance Infra-controlled RDEL has received approval from the CDR empowered group (CDR EG) for exiting the CDR scheme.

“As part of the refinancing scheme approved by the lenders, the door-to-door tenure of RDEL’s term loans stands extended to 18 years,” the company said in a statement. The consortium of lenders, led by IDBI, had agreed to the exit plan of RDEL with a longer maturity period for loans worth about Rs 6,800 crore.

Pursuant to the refinancing scheme, RDEL’s existing debt of about Rs 650 crore will also be converted into equity shares at a price of Rs 59.35 per equity share, it said.

Shareholders of RDEL by an overwhelming majority of 100 per cent had already approved the issue of equity shares to lenders by conversion of debt, at the extraordinary general meeting held on March 20, 2017. “In line with the RBI approval, RInfra through its subsidiary has also increased its shareholding in RDEL to nearly 31 per cent,” the company said.

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The approval by CDR EG makes RDEL eligible for participating in all future contracts of the Navy. Now, RDEL and Larsen & Toubro are the only two private sector shipyards that will compete with government-owned shipyards for prestigious contracts for making submarines, landing platform dock (LPD) and corvette.

Exiting CDR is also expected to provide increased financial manoeuvring to the company. RDEL’s current order stands at over Rs 5,300 crore from the Navy, the Coast Guard and commercial vessels.

Reliance Infra had acquired Pipavav Defence and Offshore Engineering Company in March 2015, which was later renamed as Reliance Defence and Engineering. Immediately after the acquisition, Reliance Group had announced its plans to exit CDR.

The Reserve Bank of India (RBI) had also given its nod to RDEL to exit the CDR package. The stock of RDEL was trading at Rs 68.55 on the BSE, up 5.87 per cent from its previous close.

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