Lenders to Alok Industries have decided to acquire a 65% stake in the company, using the Reserve Bank of India’s (RBI) strategic debt restructuring (SDR) scheme, the company said in a BSE filing.
The company said it will issue more than 255 crore fresh shares of R10 each and post the issuance, its authorised share capital will increase to R4,000 crore.
The company’s gross debt stood at R15,346 crore in FY15, up 8% over the previous year, Bloomberg data shows. Once an SDR is inked, lenders have 18 months to sell the asset, after which it will turn into a bad loan.
In Q2 FY16, the company reported a net loss of R242 crore on R3,210 crore in revenues, owing to an interest outgo of Rs 596 crore. Led by State Bank of India (SBI), the consortium includes SBI Group banks, Punjab National Bank, Central Bank, Dena Bank, IDBI Bank, Bank of Baroda, and Bank of India, among others.
The company is promoted by Ashok B Jiwrajka (2.54%) who heads it as executive director, managing director Dilip B Jiwrajka (2.5%), joint managing director Surendra B Jiwrajka (2.6%) and Alok Knit Exports (27.79%).
“Alok Industries has informed the BSE that the Company have been informed by its lead bank, State Bank of India (SBI), Backbay Reclamation Branch vide their letter dated January 18, 2016 that as decided by the Joint Lenders’ Forum (JLF) at their meetings held on November 23, 2015 and December 11, 2015, Strategic Debt Restructuring (SDR) has been invoked on the Company with the reference date being November 27, 2015,” it said in a regulatory filing.
An SDR allows banks to convert debt at a price below the current market value, and they can now own 51% or more of the equity of the company.
So far, bankers have decided to implement the SDR scheme for Electrosteel Steels, Jyoti Structures, Lanco Teesta Hydro Power, Monnet Ispat, IVRCL, Coastal Projects, Gammon India and Ankit Metal and Power.
Shares of the company on BSE closed at R5.21, down 4.93% from its previous close.