ABG Shipyard plans Cayman exit by Oct 31 to meet CDR terms

Written by Shubhra Tandon | Mumbai | Updated: Sep 11 2014, 08:07am hrs
Debt-laden ABG Shipyard hopes to exit its investments in Emerging Markets Diversified Fund of Standard Chartered Trust (Cayman) by October 31 to comply with the conditions set in the corporate debt restructuring (CDR) package, a senior company official said.

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The company is required to exit an investment of R236.4 crore from Cayman, for which the company had sought more time. Promoters of the company are also required to pledge their holding to the lenders as part of the package.

The process of exiting the Cayman investment should be complete by October 31. We have submitted withdrawal note from the units that we hold in the fund, and that should be complete by October 31," Dhananjay Datar, chief financial officer, ABG Shipyard, told FE on sidelines of an event. He added that the process of pledging promoter holding should get complete by March 2015.

As on June 30, ABG International owns 67.29% of the Surat-based company, chairman Rishi Agarwal holds 0.55% and Kamlesh Kumar Agarwal 0.18%. The promoters have already pledged close to 93% of their holding.

This deadline assumes importance as, earlier this month, the lenders had put on hold R1,300 crore of additional funding to ABG, citing non-compliance with norms mentioned in the CDR package. However, it was decided that bankers may release R650 crore in the next two months on a priority basis as the company needs money to meet its working capital requirements. Datar said these funds may come in by end of this month, which will be used on 11 ships under construction, including five from the defence sector.

ABG Shipyard's debt restructuring of 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 the form of non-fund-based exposure, including guarantees.

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. Datar said the company is confident of getting out of CDR in two years.

For the three months ended June, the company reported net loss of R56 crore and revenues of R266 crore. Interest expenses of R176 crore impacted the profitability during the quarter. In fiscal 2014, ABG Shipyard saw a net loss of R199 crore with interest expenses at R609 crore.

The ABG Shipyard scrip touched an intra-day high of R266.80 on the BSE on Wednesday before closing up 12.68% at R257.30.